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Vietnam suffering from global inflation, says economist
The current trend of escalating inflation in Vietnam is contingent upon global factors and governmental leaders must adjust their economic policies to mitigate its effects, a economist has said.
Consumer prices rose 21.4 percent in April, the fastest pace since at least 1992, as surging global demand for commodities drove up the cost of food.
Inflation was the steepest since Vietnam was struggling to stabilize prices after failed economic policies in the 1980s.
“They had a hyper inflation crisis in the late 80s; in 1989 they implemented proper macro policies, and since the early ‘90s they’ve managed to keep it under control,” said Adam McCarty, a Hanoi-based chief economist at Mekong Economics Ltd.
He said the government should rethink their exchange-rate policy and appreciate the dong, which would take some pressure off imports.
The problem therein is it might make the trade deficit higher.
It used to be covered by capital inflows.
“Most of the big policies they’ve done to try to curb inflation have only been implemented in the past month, and it takes some time to feed through. We’re going to have ongoing inflation anyway because it’s a global phenomenon. Vietnam effectively imports the inflation,” he said.
Thanhnien
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