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Inflation down, FDI reaches record high
Compared to June, the consumer price index (CPI) of July increased by 1.13%, the lowest increase so far this year.
Trade deficit plunges
Compared to June, July’s CPI rose by 1.13%, the lowest level so far this year. Hanoi saw an increase of 1.65%, HCM City 0.54%, and the central city of Da Nang the highest increase, 2.46%.
According to the Ministry of Industry and Trade, it is a good sign that the trade deficit plummeted in June and July: $728 million in June and $800 million in July, compared to $3.2 billion and $1.9 billion in April and May.
Though Vietnam was strongly affected by the world’s situation, the country’s total export revenue in the first seven months of the year is estimated at $36.88 billion, a surge of 27.7% year on year, and the highest level compared with the same period of previous years.
Exports in July continued to grow highly, thanks to price increases in the international market. In addition, processed, industrial and handicraft exports increased remarkably in terms of quantity.
Export revenue from January-July 2008 was $10.1 billion higher than the corresponding period of 2007. The ratio of semi-processed products to export revenue decreased.
The Ministry of Planning and Investment predicted that the biggest difficulties in industrial production are the high prices for imported materials and gas (30% up), lack of capital, higher banking interest rates (over 20%/year), and power cuts.
At a government press briefing on August 5, a correspondent asked a question about the responsibility of the Ministry of Industry and Trade in wrong forecasts of rice prices on the world market and rice reserves in Vietnam, which led to the government’s policy to restrict rice exports and was said to cause losses of $500 million for farmers and rice export turnover to be insufficient to import fertiliser. Deputy Minister of Industry and Trade Nguyen Thanh Bien said: By July, Vietnam had exported 2.7 million tonnes of rice, earning $1.8 billion, while it had imported $1.1 billion worth of fertiliser. This volume of fertiliser is used for rice and other crops like coffee, cocoa, etc. Sometimes the rice price climbed to $1,200/tonne but this was a “virtual price”, which couldn’t be used to make comparison and to calculate losses of several hundreds of USD. Moreover, rice prices have gone down recently because the price for summer-autumn rice is always lower than that of the winter-spring crop. Related ministries are considering increasing the purchase of rice and rice exports.
$21.45 billion investment in services
Another good sign for the economy is that the newly registered direct foreign investment (FDI) volume in the first seven months of the year reached $45.2 billion, an increase of 373% year on year, a record high level, as many large projects were licenced. FDI is mainly registered in the service sector with $22.84 billion.
“Foreign currency reserve continued to increase. Though some investors withdrew capital from Vietnam, the total portfolio investment capital still rose by $700 million and this shows the trust of foreign investors in Vietnam’s efforts and that’s a good sign for the economy,” said Vice Chairman of the Government Office, Tran Quoc Toan.
Prime Minister Nguyen Tan Dung defined that key missions in the remaining months of the year will be controlling inflation, stabilising the macro economy, ensuring social welfare, and striving to attain the highest growth rate. To reach GDP growth rate of 7% for 2008, the government will continue to implement its eight groups of solutions.
VNN
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