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>> Vietnam’s top 10 in 2010: Economic events
Vietnam’s State Bank has said that although a contributing factor, Vietnam’s fiscal policies were not the main cause of high inflation.
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At the government’s meeting on December 31, Governor of the State Bank of Vietnam (SBV) Nguyen Van Giau said that factors connected with monetary policy have had some effect on the annual consumer price index (CPI) increases, although up to 4.65% of the increase could be attributed to this while the remainder came from other factors.
Giau cited an assessment by the National Advisory Council for Monetary Policy released on December 24, to give a more complete picture for the reasons behind 2010’s high inflation.
According to the council, by the late third quarter of 2010, inflation was basically under control, but in the fourth quarter, the inflation increased to levels much higher than those which were forecast. This was mostly due to rising prices globally, which had significant consequences for Vietnam, a country that imports up to 80% of its materials and fuels.
Another reason behind the rising CPI last year was the phenomenon of Chinese traders, who rushed in to buy up much of Vietnam’s goods due to poor crops in their own country.
2010 brought a number of floods, storms and diseases in the agricultural sector. Increases in the base salary, improvements in education and healthcare services and a stronger USD also helped to push prices dramatically up in the fourth quarter.
Vietnam’s (CPI) in December increased a record level of 1.98% compared to November, bringing the inflation rate for the whole year to 11.75%.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), was cited by Dau Tu Newspaper as saying that Vietnam should focus on curbing inflation in 2011, and that the task should be seen as a priority right from the first quarter.
If the country does not focus on curbing inflation, the macroeconomic uncertainties in 2011 could be even greater than in 2010 he noted, suggesting that the target inflation rate should be set at 6% in the coming year.
