WB Vietnam chief economist warns of rising inflation; expects 8.2% by 2013 year-end

Deepak MishraViet Nam’s Consumer Price Index (CPI) is expected to go up to 8.2 per cent by the year-end, the World Bank (WB) revealed yesterday in its economic outlook report. The figure is much higher than the Vietnamese Government’s target of 6.5-7 per cent.

Viet Nam’s inflation this year is set to be affected by the minimum wage increase from the beginning of this month. Price hikes of electricity, hospital fees, transport and education services would also make prices strongly rise, said Deepak Misha, WB’s chief economist.

But the country’s economic growth would increase more rapidly in the last quarters of this year and is expected to hit 5.3 per cent before rising to 5.4 per cent in 2014, he said.

He added that Viet Nam has now had the longest spell of slow growth since the start of doi moi (renewal).

The figure is much higher than the Vietnamese Government’s target of 6.5-7 per cent and is also far above the forecasts of some economic institutions.

Viet Nam’s inflation this year is set to be affected by the minimum wage increase from the beginning of this month. Price hikes of electricity, hospital fees, transport and education services would also make prices strongly rise, said Deepak Misha, WB’s chief economist.

But the country’s economic growth would increase more rapidly in the last quarters of this year and is expected to hit 5.3 per cent before rising to 5.4 per cent in 2014, he said.

He added that Viet Nam has now had the longest spell of slow growth since the start of doi moi (renewal).

The report revealed that Viet Nam is the only large developing country in the East Asia and Pacific region, other than China, whose post-crisis growth rate has been lower than its pre-crisis level.

The economies of Indonesia, Malaysia, Philippines and Thailand have all grown faster in the post-crisis period, Misha said.

He argued that the economy face three big issues; high fiscal deficit, slow progress in banking sector reform and a lack of progress on the restructuring of State-owned enterprises.

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