Deepak Mishra, Chief Economist of the World Bank (WB), forecast that Vietnam’s inflation rate would reach 8.2% by the end of 2013, compared to the set target of 6.8%.
Deepak Mishra, Chief Economist of the World Bank
He made the forecast at a press conference updating Vietnam’s economic growth held in Hanoi on July 12.
Despite being lower than last year's forecast of 8.5%, the rate is higher than the government’s target of 6.8%, as well as the one forecast by both local and international economists.
According to several local economists, keeping the inflation rate at 6-6.5% this year is feasible for the country in spite of concerns about the possible recurrence of inflation rate increases. Meanwhile, JP Morgan Chase, said that Vietnam’s inflation rate could be curbed at just 6.1%, the lowest since 2003; Standard Chartered said that the level reduced the rate to 7.2% from 8%. Recently, ANZ forecast the country’s inflation rate will be from 6-8% this year.
The WB economist said that Vietnam would achieve a GDP growth of 5.3% against 5.2% last year. According to him, the country’s inflation rate would fall to 7.9% in 2014.
Explaining for the 2013 inflation forecast, the slower GDP growth has forced the government to continue loosening monetary and fiscal policy, which is a cause of inflation.
He noted that Vietnamese economic growth has been slowest since the 1980s, meanwhile, other economies seem to be warming up again.
Before the global economic downturn, Vietnam’s GDP growth was just behind China and was higher than the Philippines, Malaysia, Indonesia and Thailand. However, after the crisis, Vietnam and China have seen the sharpest drop in growth, he said, adding that Vietnam’s economic growth is now lower than the Philippines, Thailand and Indonesia.
“It's a worrying signal. With the current low per capita income, Vietnam has a long way to go in order to catch up with the Philippines, Malaysia and Thailand," the World Bank expert said.
According to the economist, the slow implementation of economic restructuring programmes would reduce investors’ confidence in Vietnam.
