Economic Stability: Helping Hand to Curb Inflation
Following radical measures adopted by the Vietnam’s Government, its economy has witnessed new positive signs of development. As of May 2011, some fundamental economic indicators like gold and consumer price index (CPI) which seemed to be beyond control have been controlled and regulated by market mechanism.
The General Statistics Office (GSO) said the country May CPI rose 2.21 percent from April. According to experts, the inflation hike was attributed to the sharp rise in prices of essential commodities like gas, cement and kerosene. Besides, CPI was also affected by two petroleum price hikes in February and March.
The Price Control Department under the Ministry of Finance said prices will likely ease in June and CPI growth may slow down 1.2 percent against May because prices on global markets are on the fall. Additionally, another reason was the improved production of Vietnamese economy in the coming months: Industrial and agricultural production will likely reach or exceed targets; demand and prices of some essential goods will tend to fall, and tightened monetary and public spending reduction policies will factor in a wider scope.
In fact, volatile items like gold and interest rate were adjusted and controlled by authorities. According to experts, the overheating fever of domestic gold price has come to an end and the bullion will little affect people’s lives. [Vietnam] also managed to prevent some individuals and organisations from manipulating the volatility of gold bars to seek profit and impacting the stability of Vietnamese economy. Moreover, the Government drastically allowed commercial banks to raise deposit interest rates [applied to local currency] to 14 percent. This draconian measure, in the short term, caused difficulties for some small and medium-sized enterprises with limited financial availability as they had to borrow State money to maintain production and business activities. But, high interest rates attract public money into banks.
According to economic specialists, although economic indicators like CPI tend to rise from now until the end of this year but macroeconomic solutions adopted by the Government began producing effects and market prices will be kept in check. Inflation is inevitable in the context that global and domestic economies are developing complexly. The Government policies like the Resolution 11 and public investment reduction have brought in effects. Moreover, the Government also gives priority to policies in favour of social security in the coming time.
Anh Phuong
Vietnamese
