Good news for economy
03-OCT-2008 Intellasia | 01/Oct/2008 Dau Tu Chung Khoan page 30
Oct 3, 2008 - 7:00:00 AM
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The Consumer Price Index (CPI) last month increased by 0.18% month on month, marking the lowest growth since the start of this year, even lower than all previous Septembers of 0.51% in 2007, 0.3% in 2006 and 0.8% in 2005. This means that the inflation has been curbed so many commercial banks started to lower lending rates and restore securities and property lending operations that were tightened up previously. All of rally signals are good news for the economy.
On the stock market, a series of big companies such as Vinamilk and PV Drilling consecutively publicised the third quarter business results and confirmed that they totally could surpass the year's financial targets.
According to the analysis of the finance ministry's Price Management Department, there are four big macro-economic factors helping September CPI reduce. First, the supply and demand of goods is ensured. Secondly, the state agencies absolutely restricted spending as the government targeted to reduce the state budget overspending down to 17 trillion dong. Thirdly, September's trade deficit of US$500 million against US$900 million of August made ease the world market's affect to Vietnam. Lastly, the government's measure package to curb inflation and tighten up monetary policies more was continued to be implemented effectively, which was shown that total outstanding debts of banks last month stood at low level and the lending rate band is in the upward trend.
As predicted by Market Management Group, CPI growth of the whole year is targeted at below 25%.
Although the inflation seems to be very optimistic via reviewing the movement of CPI, economists also said that a difficult period after a highly increasing inflation is an avoidable law. Ngo Tri Long, an economic specialist said, in line with the economic law, prices of commodities usually increase more sharply in Q1 and Q4 yearly so we cannot subjective. Inflation initially was down but the policies also made the economic growth slow down and difficulties in employment. Due to high inflation in the previous period, the government had applied monetary tightening up policies so many businesses were hard to borrow bank loans and could file for bankruptcy. Currently, the inflation movement is comfortable and the government will likely have adjustments to deal with these financial difficulties for businesses.
Yet, Long also warned, inflation has not been stopped because actually prices of goods are still high. The most importance is to have flexible adjustments to support companies while inflation is gradually put under control.
Talking with the press recently, Vu Thi Kim Hanh, director of the Enterprise Support and Business Research Centre spoke, the prolonged inflation has forced people to have more intelligent spending that also make many businesses afflicted.
Vietnam's economy will continue facing difficulties not only in 2008, but also in 2009 and surge in 2010.
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