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 However, the government also announced potentially inflation

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Registration date : 2011-01-31

PostSubject: However, the government also announced potentially inflation   Thu Jun 30, 2011 2:29 am

s, and Finland-based Nokia, which plans to make low-end handphones.

Unlike most other Asian economies, Vietnam's economic problems are not the result of strong capital inflows. Rather, they arise from rapid credit growth in recent years and wasteful spending by state-owned companies. In other words, they are well within the ability of the government to control. The intrepid foreign investors who are placing their bets on the country overcoming its current difficulties are no doubt hoping that the determined efforts of government planners in recent weeks will continue.

Vietnam consumers struggle with rising food prices

By Marianne Brown, DPA 26 April 2011

Lien Ngoc Ha has some difficult decisions to make. She only has 100,000 dong (about 5 dollars) to feed her husband and her two sons each day. 'Six months ago I needed only 50,000 dong to make three meals for my family,' she said. 'I used to buy two chickens with the money. Now I can only buy one. I have to spend twice as much to buy twice as little.'

Food prices have risen 24 per cent over the last 12 months, the securities firm Barclays Capital reported Monday. The problem is afflicting the whole region, although Vietnamhas been hardest hit. The cost across Asia is rising at 10 per cent annually, the Asian Development Bank said in a report released on Tuesday. It blamed production shortfalls due to bad weather, high oil prices and export bans by several key food-producing countries. The problem is threatening to push millions of people in developing countries into extreme poverty, the bank said.

At a market in Hanoi, the price of meat has increased as much as 40 per cent from the beginning of this year. The price of pork alone has doubled. Nguyen Song Toan , 38, owns a poultry and vegetable stall at the market. Toan earn between 6 and 7 million dong (300 to 350 dollars) a month. It's 'enough to survive' he said, but he can no longer save money for his daughter's education. ‘Everything is more expensive, electricity, petrol, food, but people don't earn any more money.' Like other Asian nations, Vietnam is struggling to curb inflation at the same time as high economic growth. The country has to contend with other problems that also threaten economic stability, including a huge budget deficit.

In a bid to tackle the problem, the government announced that delivering rapid growth was not a priority this year, thus marking a dramatic change in policy. Instead, the focus is to achieve macroeconomic stability through tightened fiscal and monetary policies, including cutting public spending. The government also last month said it would try to keep credit growth below 20 per cent, down from the previous target of 23 per cent. As part of the battle against inflation, the State Bank of Vietnam raised its main interest rate from 9 per cent to 11 per cent in February, and devalued the dong by 8.5 per cent against the dollar, the fourth devaluation in 14 months. The devaluations have put the official value of dollar at 20,693 dong, a decrease in the value of Vietnam's currency of 13 per cent since November 2009, when banks offered around 18,000 dong to the dollar.

However, the government also announced potentially inflationary policies such as sharp increases in electricity and fuel prices. As a result, the consumer price index rose 3.32 per cent over the previous month in April, marking an annual pace of 17.51 per cent - the highest since December 2008, according to the Gener
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