Measures to curb inflation need to be implemented more drastically and synchronously in the context of continuing rises in the consumer price index (CPI) in recent months, economic experts said.
The requirement has become more urgent at a time when April’s CPI climbed to 3.32 per cent, the highest and most extraordinary level since May, 2008.
Statistics show that between 1994 and 2010, April CPI reached an average increase of 0.3 per cent over the previous month. Even during the global financial crisis in 2008, the April CPI stood at 2.2 per cent.
April’s CPI pushed the country’s inflation in the first four months of this year to 9.64 per cent, outdistancing targets set for the whole year.
According to experts, this scenario had been forecast after the government decided to devalue the VND against the USD by 9.3 per cent at inter-bank transactions and raise petrol and power prices, adding that inflation was spreading globally, especially in Asia, exerting great pressure on Vietnam’s economy.
Duong Thu Huong, Vietnam Banking Association’s General Secretary, and Tran Hoang Ngan, member of the National Advisory Council for Financial and Monetary Policies, agreed that the government’s timely adoption of Resolution No. 11 had prevented inflation from getting even worse.
They also put stress on the need to be consistent on tightened monetary policy, avoiding easing the policy too soon as inflation could hit double digit growth at the end of this year.
“If the government is resolved with the tightened monetary policy between now and the third quarter, inflation could decrease at the end of the third quarter and the beginning of the fourth,” said Vu Thanh Tu Anh, Director of Fulbright Economics Teaching Programme.
A number of financial organisations such as the Asian Development Bank (ADB) and Barclays Bank of the UK shared gloomier views on Vietnam 's economy, saying that the inflation rate in the next several months would continue to increase as the price level is already 13 to 14 per cent higher than the same period last year.
ADB forecast that the country’s inflation may stand at 13.3 per cent this year while Barclays Bank said the figure would be 15 per cent.
The experts said short-term measures, including exchange rate adjustments, repeal of the free foreign currency market and a cut in public expenditure were only the start in effort to bring inflation under control. They underlined more consistent measures for the long term, especially economic restructuring.