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High inflation the dark part of 2010 socio-economic picture   2011-02-17 - Thoi bao Kinh te Vietnam

The high economic growth in 2010 has been overcast by the high inflation rate.


On February 15, a report on the socio-economic development in 2010 was submitted by the Ministry of Planning and Investment to the National Assembly’s Economics Committee for verification. This is a preparatory work for the upcoming National Assembly’s session in March.


The reports showed a lot of “impressive indexes” of  Vietnam’s achievements in 2010. The export growth rate was very high, at 26.4 percent, while the initially target was 19 percent only. The figure represented a 26.4 percent increase in comparison with 2009 and it was four times higher than the goal set by the National Assembly.


The total investment capital reached 803.3 trillion dong, increasing by 17.1 percent over 2009 and equal to 41.9 percent of GDP (the target was 39.5 percent of GDP).


In general, of the 21 targets set by the National Assembly, only four targets were not reached. These include 1/ the consumer price index CPI increase 2/ the percentage of urban people with access clean water 3/ the percentage of solid wastes in urban areas that can be collected and 4/ the enrolment for universities and colleges, and 5/?? the forest coverage rate.


In general, the report shows a very bright picture of the socio-economic situation, and included only three lines on the problems and shortcomings.


Nevertheless, at the expanded meeting of the National Assembly’s Economics Committee, the words “weak” or “very weak” were still used to describe the national economy’s capability.


In the eyes of Le Quoc Dung, Deputy Chair of the National Assembly’s Economics Committee, the national economy has been facing serious problems that need to be settled quickly.


“This seems to be good information, that only four out of the 21 goals were not reached. However, only the high CPI alone can negate/undermine many other achievements,” Dung said.


According to Dung, the continued high inflation rates in the past few years have been negatively affecting people’s assets, forcing them to put their money into gold, land and other investment channels. This has badly influenced  the implementation of many policies. “We should not celebrate just because “only” four goals were not reached,” Dung emphasized.


Sharing the same worry about the high inflation, Deputy Chair of the Economics Committee Nguyen Van Phuc likened the sum of money people to an ice cube. People leave home for the market with the ice cube, but by the time they reach the market, the ice cube has already melted.


It is obvious that the high inflation is now the biggest headache  for Vietnam, and the inflation rate draws more public attention that other “impressive figures,” such as the high economic growth rate of 6.78 percent or the high export growth rate of 26.4 percent.


At a meeting held in early October 2010, which predicted a 7-8 percent inflation rate, some National Assembly’s Deputies warned that the high economic growth would be meaningless with the inflation rate is as high as 7-8 percent).


However, the actual CPI in 2010 was much higher than the predicted 12 percent. For the last many years, the Vietnam dong has been continuously depreciating, despite the appreciation of other currencies. Dr Tran Du Lich, Member of the Economics Committee, considers this a big problem, and thinks that it is because of the weakness of the national economy.


Experts have no optimistic forecasts for 2011. Deputy Minister of Construction Trinh Dinh Dung said that there were still many unsolved problems in 2010, and  which will become more serious in 2011 The biggest pressure for the national economy will come from the price increase of key products.


“We have never faced such big difficulties before,” Dung said.

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