Vietnam - Concerns remain on CPI drop

A slump in prices of food and foodstuffs in March has contributed to lowering the consumer price index (CPI) in HCM City but raised concerns over market stagnancy, a meeting heard yesterday.

Chaired by Le Thanh Hai, Politbureau member and Secretary of the HCM City Party Committee, the two-day meeting of the ninth City Party Committee that began yesterday seeks to review socio-economic development in Q1, decide on Q2 measures and to discuss Party building activities for 2012.

According to a report released by the HCM City People's Committee at the meeting, prices of food and foodstuff dropped by 1.06 per cent and 1.43 per cent repectively last month compared with February.

This affected the the city's CPI growth rate of 0.12 per cent in March, much lower than the 2.2 per cent growth recorded for the same month last year. While the city's price stabilisation programme has been credited with the lower prices, the sharp decrease in prices of some kinds of foodstuff have raised concerns among producers as well as consumers.

The report said information about the use of banned substances in animal husbandry has made customers turn their back on pork, forcing prices down and could see the industry become stagnant.

Slower growth

It also said HCM City attained a gross domestic product (GDP) growth of 7.4 per cent in the first quarter of 2012, much lower than the 10.3 per cent rate obtained in the same period last year.

The service sector grew by 8 per cent and the industrial and construction sector grew by 6.6 per cent, compared with 10 per cent and 10.9 per cent respectively in the first quarter of 2011.

Lower purchasing power, high lending interest rates and difficult access (for businesses) to bank loans were the main reasons behind the lower growth rates, the meeting heard.

The city also saw a significant year-on-year fall in Q1 export growth to 8.6 per cent, much lower than the rate of 20.7 per cent recorded in 2011.

Q2 measures

In the second quarter of 2012, the city plans to cooperate with the State Bank of Vietnam in lowering lending rates further and providing sufficient credit to enterprises, helping them maintain and develop production and business activities.

Priority (in providing commercial loans) will be given to export-processing, processing and supporting enterprises, and medium and small enterprises employing large numbers of workers.

The city will also aim to boost industrial production and develop the construction sector further.

To "rescue" the real estate market, HCM City would take measures to develop the construction sector and at the same time, complete a plan for property market development, the meeting heard.

The city will also speed up the implementation of social welfare policies including the hunger eradication and poverty alleviation and price stabilisation programmes.

The HCM City People's Committee also asked concerned agencies to focus on restructuring the city's economy, including State-owned companies and the financial and banking sector, with the aim of creating more competitive products.

VNA

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