Vietnam - Vietnam’s inflation forecast at 11.3pct in 2012: Standard Chartered

In its report on Vietnam’s economic performance in 2011 and outlook in 2012 announced on November 17, Standard Chartered has forecast Vietnam’s inflation in 2012 at 11.3% and it will fall to 8% in 2013.

Standard Chartered said that in comparison with the same period last year, Vietnam’s inflation is gradually decreasing and expected to continue to subside to 19.7% in December and to one-digit level by the end of Q2-2012 and average at 11.3% in 2012.

The bank said the inflation outlook has positive signs and the recent adjustment on food prices in the world will help control inflation in coming months. In addition, the State Bank of Vietnam (SBV)’s tightening monetary policy can also help reduce inflationary pressures.

Therefore, the report said: "We expect inflation ratio to return to single digit level by the end of second quarter or early of the third quarter 2012." However, Standard Chartered said that easing inflation is unlikely to create enough conditions for monetary policy in the future as the new pressures causing the devaluation of the local greenback still remain.

"The Vietnamese dong is likely to continue to depreciate in 2012 due to the current account deficit and the country's low foreign currency reserves," the report said.

Standard Chartered said that in 2012, Vietnamese government will have to continue to face the challenges of local currency devaluation pressure and credit growth control while also supporting other economic activities. These challenges will also be affected by the difficulties of the global economic situation and evolution of the export markets.

Standard Chartered's specialists forecast, the forex rate is expected to be 20,600 dong per US dollar in 2011 and 22,000 dong/US dollar in 2012. Vietnam's gross domestic product (GDP) growth would be 6.3% in 2012 and 6.5% in the following year.

Vietbiz24

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