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| Vietnam should be cautious with re-inflation: warns Standard Chartered |
| 16/Mar/2010 Intellasia | 15/Mar/2010 CafeF | Thoi Bao Kinh Te Vietnam |
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| 16 Mar, 2010 - 9:10:46 AM |
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Standard Chartered Bank has said that Vietnam's economy may have to face higher inflation in coming time.
This bank's analyst group said that Vietnam's GDP growth this year could reach 6.7 percent, but the economy would have to face re-inflation and trade deficit is tending to increase sharply.
According to Standard Chartered, inflation in last December and January, 2010 was over 7 percent. Since the middle of 2008, inflation posted a monthly rise of over 1 percent for two consecutive months. The price of foodstuff, housing and land and transportation were main factors causing strong increase of inflation.
The government's decision on increasing the price of electricity and coal commodities directly caused high increase tendency of inflation. This decision is forecasted to contribute by 0.23-0.36 percent in the country's consumer price index (CPI).
At the same time, the devaluation of dong would be able to put pressures on the price of import items. Analysts said that the inflation would exceed the threshold of 10 percent till the end this year and it would be 8.9 percent averagely for the whole year 2010.
According to Standard Chartered, Vietnam should be careful to re-inflation issue because it could cause many disadvantageous impacts on the economy in coming years.
The solution that Vietnam can apply to curb re-inflation is increasing the interest rate and decreasing the liquidity.
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