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Keeping inflation below the 7% set by the National Assembly will be a challenge for Vietnam in 2011, but the country will do what it can to meet this goal.
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| CPI continues rising |
"We continue to see sharp increases in the price of materials on the world market, said Minister of Finance Vu Van Ninh." He added, it will be difficult for Vietnam to control its consumer price index (CPI) as long as the current trade gap continues to be wide. It is estimated to be around USD12 billion in 2010.
China is also facing inflation, government debt and a real estate bubble. Any move that nation makes to deal with its problems will have a serious impact on Vietnam, Ninh said.
Many economists have forecast that, this year, the global CPI will exceed the expected level of 1.3% for developed countries, and 5.2% for developing countries, with Japan and the US pouring money into a new stimulus packages; USD61 billion and USD600 billion respectively.
To restrain the inflation, the Vietnamese prime minister has recently requested that there be no increases on the prices of electricity, coal and petroleum until the Lunar New Year. The government has also issued a decision to maintain land prices largely unchanged from last year, especially in urban areas such as Hanoi and Ho Chi Minh City.
However, Minister Ninh worried that, “Suppressing the prices of essential goods could have adverse effects on the national economy in the long term.”
Speaking on the matter, Nguyen Van Bien, Head of the Planning Division under the Vietnam National Coal and Mineral Industries Group (Vinacomin), said if power prices are continued to be kept at current rates, it will slow down the power sector’s development and result in a more serious power shortage in the future.
Last year, Vietnam’s inflation rate was estimated at 11.75%, much higher than the target of 7%, set by the National Assembly or 8% set by the government.
Earlier, 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.
