Vietnam - Vietnam’s economy slows, inflation soars

Vietnam’s economic growth slowed to 5.9% and annual inflation soared in 2011 even as the government focused on fighting higher prices by tightening bank lending.

Inflation rate doubled, rising to 18.58% this year compared with 9.19% in 2010, government data showed yesterday.

“The gross domestic product (GDP) growth in 2011 at around 5.9% is relatively high under the circumstance of efforts to control inflation,” the government said in a report seen by Reuters. This compares to GDP growth of 6.78% in 2010.

The consumer price index (CPI) in December grew 18.13% against the same month last year, easing from an annual rise of 19.83% in November, the government’s General Statistics Office said in its monthly report.

“Inflation eased, thanks to the continuation of tight policy measures,” said Alan Pham, chief economist at VinaCapital Investment Management Co. “This is a hopeful development.”

Prime Minister Nguyen Tan Dung said in the government report that Vietnam’s first priority in 2012 would be to control inflation, with a targeted CPI rise of 9%, while aiming for economic growth of 6%.

The central bank aims to cut interest rates next year to make funds easily available for businesses. Dong loan rates rose as high as 20%-25% earlier this year.

The central bank expects bank loans next year to rise 15%-17% and money supply to grow 14%-16% from 2011.

The macroeconomic targets for next year, including plans on cutting rates and the expansion of credit and money supply, were reasonable given the country’s economic situation, Pham said.

Reuters

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