UNESCAP Says Inflation is Vietnam's Key Concern This Year

Inflation will remain a key concern for Vietnam in 2008, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) said in a report March 27.

In the economic and social survey for Asia and the Pacific, ESCAP said that Vietnam can maintain high economic growth this year, but it has to deal with fast rising inflation.

 

Vietnam will continue to have strong economic growth in 2008 at 8.2 per cent thanks to high investment growth with expansion in the industrial and services sectors.

 

However, Vietnam will face a relatively high inflation rate of 7.7 per cent in 2008, compared with 7.9 per cent last year, which will be a key concern for the country in the year ahead.

 

Though local authorities have sought to address inflationary pressure with a tighter monetary policy, a considerable increase in foreign capital flows to Vietnam is challenging monetary authority’s efforts to contain inflation, which continues to hover above the targeted rate, ESCAP said.

 

A widening trade deficit and a high current account deficit are also negative elements of the country’s outlook.

 

ESCAP suggested Vietnam’s government should continue to pursue tight monetary and flexible foreign exchange rate policies, while boosting reform of banks and enhancing participation of private sector in the economy. (VnEconomy, VNA)