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Standard Chartered lowers inflation tip after strong growth
Standard Chartered Bank has revised its inflation forecast, from 11.5 per cent to 9.5 per for the year.
The forecast was adjusted in light of Viet Nam's strong economic performance during the first half of this year.
The economy was estimated to have grown by 6.2-6.4 per cent in the second quarter of the year, after the country achieved 5.8 per cent growth in the first quarter. However, the bank remained prudent toward the country's inflation rate because of Viet Nam's reliance on external sources of capital.
Despite the month-on-month increase of inflation by 0.1-0.3 per cent during the past three months, strong retail sales and industrial production could fuel an increase in inflation in the months ahead. The stability of commodity prices could disappear if the US dollar deflates, which would increase the price of commodities. "We acknowledge the current benign inflation environment but remain vigilant for the potential rise in inflation in the second half of 2010," said Tai Hui, head of Research of Southeast Asia Region of Standard Chartered Bank. "After all, Viet Nam has the highest inflation volatility in East Asia."
The trade deficit, which registered US$6.5 billion during the first half of the year, is expected to reach $13 billion by the year's end. The country has also experienced moderate growth in the import and export sectors.
The increase in remittances, which amounted to $3.6 billion in the first half of the year, along with increased foreign direct investment (FDI) of $5.4 billion and a stable trade deficit are expected to increase the stability of the country's currency.
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