Vietnam’s inflation rate in 2013 under seven percent: forecast report

The National Financial Supervision Committee has released a report forecasting that Vietnam’s inflation rate in 2013 will be tamed under seven percent.

The committee cited the high economic growth in the first quarter as a positive sign that should create a foundation for successfully achieving the country’s 2013 economic development goals.

Retail sales of goods and services (after deducting inflationary price factors) increased by 4.5%, compared with 5% in the same period of 2012.

Investment from the state budget dropped by 4.9% over the same period while the number of newly registered enterprises decreased by 6.8%.

If the domestic market does not see strong fluctuations in the following three quarters, the 5.3 percent GDP growth target will be within reach, the report informed.

However, the committee warned the national economy is still experiencing numerous difficulties, such as weak production capacity and low consumer demands.

Export revenues, which are considered a key factor in boosting economic growth, are predicted to decline in 2013 due to falling prices for Vietnamese exports on the global market.

Over the past ten years, the average inflation rate in the first quarter accounted for 40 percent of the entire year’s figure. Weighing up the advantages and disadvantages of the economy in 2013, economic  experts predicted this year’s inflation rate would be kept under 7 percent.

Such a low rate may force deposit interest rates to go down to 7 percent, while the lending rate may drop to 10 percent.

The committee has proposed boosting production and offering more assistance to businesses in order to fulfill the year’s set target of achieving higher economic growth than in 2012.

It stressed the need to continue adjusting bank interest rates, settling bad debts, Preferential interest rates should also be given to construction and real estate projects to support the national economy.

The committee also suggested reducing the corporate income tax to 20 percent to encourage private investment and attract more foreign investment, as well as speeding up the disbursement of investment in State-funded projects.

Source SGGP, Translated by MT

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