|
Inflation is Vietnam’s main challenge: HSBC
HSBC in its latest report on Vietnam’s economy said inflation remains the country’s greatest challenge, as the consumer price index (CPI) is expected to top 20 percent year-on-year in June.
In the report, HSBC revised its CPI forecast for Vietnam to 16.7 percent instead of 14.3 percent in 2011, and 9.7 percent instead of 8.9 percent in 2012.
Although the Vietnamese government will carry out strict measures to curb inflation, it will hamper the country’s growth for the rest of the year, HSBC said.
HSBC said even if the CPI climb in June is modest at above 0.4 percent, the headline inflation will surpass 20 percent.
“With our forecast of 0.7 percent month-on-month, barring any official hikes in fuel and electricity prices in the coming days, we expect a reading of 20.4 percent year-on-year for June,” the bank said.
HSBC said even if prices held steady, inflation wasn’t likely to return to the single-digit zone until the start of 2012.
Food, which accounts for 40 percent of the CPI basket, remains the key contributor to inflation in Vietnam. The recent surge in global food prices may have yet to be fully reflected in Vietnam and food inflation is likely to keep accelerating in the coming months.
Meanwhile, further official fuel and electricity price hikes in the near future should give inflation a further boost, the bank said.
HSBC also cut its forecasts for Vietnam’s GDP growth for 2011 to 6.1 percent instead of 6.8 percent previously and 7 percent for 2012 instead of 7.4 percent previously.
The comments by HSBC are also echoed by the World Bank, which in a report prepared for the Mid-Term Consultative Meeting due in Ha Tinh Province on Thursday says inflation will peak by around the end of September and start to steadily decelerate thereafter to reach around 15 percent by this December 2011.
However, the inflation forecast for 2011 depends critically on whether the government's policy package of Resolution 11 will succeed in restoring policy credibility as well as the confidence of domestic and foreign investors.
The World Bank said that decisive and sustained implementation is critical to rein in inflation, build confidence, and strengthen the external position.
Vietnam headline inflation accelerated to 19.8 percent year-on-year in May 2011, the highest in the past 26 months. This reflects rising international food and commodity prices, the impact of large adjustment of domestic prices of key utilities and a rapid pass-through of import products into domestic prices through a weakening dong, the World Bank said.
According to World Bank, the economy started to slowdown in the first quarter of 2011, when the full impact of high inflation and stabilization measures had not yet been felt.
The second and third quarters of 2011 are likely to be tougher than the first quarter, though recent forecast from the Ministry of Planning and Investment shows that the economy is likely to grow at 5.6 percent during the first-half of 2011.
“Assuming that the government's policy measure will restore confidence and rebuilt the momentum for growth, we expect the economy to achieve a growth rate of slightly below 6 percent,” said the World Bank’s report.
tuoitrenews, TBKTSG
|
