Vietnam News Network

Standard Chartered Bank’s latest report on the economy, maintains that Vietnam may obtain a 6.7 percent GDP growth rate in 2010, but also warns that the country must be wary of high inflation.

Standard Chartered: Vietnam makes it a different year

Standard Chartered, Fitch revise Vietnam outlook

Standard Chartered Bank raises stake in Asia Commercial Bank

The bank worries that inflation in December 2009 and January 2010 grew to over seven percent. This was for the first time since 2008 that monthly inflation increased by more than one percent during the two consecutive months. Food prices, accommodations and transport cost were cited as the main factors leading to the sharp increase of inflation.

The Government hike in electricity and coal prices will force inflation higher, “contributing” to the consumer price index (CPI) by 0.23-0.36 percent.

Meanwhile, the depreciation of the dong may also put pressure on imports. The Standard Chartered Bank’s research team thinks that inflation may exceed 10 percent by the end of the year and reach 8.9 percent on average for 2010.

The research team reasons that Vietnam should not discount the return of high inflation, because it will bring about negative economic effects in 2010 and upcoming years.

To date, Vietnamese economists still disagree on whether high inflation will be the major threat for 2010. Some believe that it would be an “exploit” to keep the inflation rate at one digit rate in 2010, while others contend that Vietnam should not be too worried about high inflation since few factors support its return.