News Room - Business/Economics

Posted on 16 Jun 2008

Vietnam sees high inflation easing in 2009

Inflation in Vietnam is expected to ease to single-digit levels next year, Finance Minister Vu Van Ninh said Sunday, vowing to tame surging price pressures that are straining the emerging Southeast Asian economy.

Vietnam is expected to post double-digit inflation this year, Ninh told an economic forum in the Malaysian capital, adding that fighting price pressures was at the top of the government's agenda.

"This year inflation might be two digits," Ninh said. "In 2009, we hope we can reduce it to one-digit inflation."

He did not elaborate on why he thought inflation would cool.

The Vietnamese government is facing one of its biggest challenges with yearly inflation in double-digits for seven consecutive months, hitting 25.2 percent in May.

Soaring imports have tripled the trade deficit this year to $14.4 billion, while the Vietnamese stock market has lost 60 percent this year, making it the world's worst performing market.

Vietnam's central bank raised interest rates last week and lowered the value of the dong by 1.96 percent on Wednesday to try to fight double-digit inflation and currency speculation.

But global credit ratings agencies and economists say it has not dealt quickly enough, nor strongly enough, to stem rising prices.

"After analysis we find that we imported inflation from outside because we rely much on imports," Ninh said.

"Second, we maintain a lower petrol price than other countries, lower than Laos and Cambodia. We will step by step adjust the price and apply other measures," he added, without elaborating.