VINACHEM

In the updated May’s report on the global economic prospect, the EIU of TheEconomist predicted that Vietnam’s inflation rate in 2012 would be 13.8 percent.

Meanwhile, in its most optimistic forecast, the World Bank has lowered thepredicted inflation rate in Vietnam from 10.15 percent to 9 percent.

Prior to that, both international and domestic institutions said that Vietnamwould make an exploit if it successfully curbs the inflation rate at one digitlevel.

However, VEPR, an economic research center belonging to the Hanoi NationalUniversity, has affirmed in its report about the economic prospect in 2012 thatthe inflation rate would be abnormally low this year. In the most pessimisticscenario drawn up by the center’s economists, the inflation rate would be 6.2percent.

“Maybe our method used to calculate the inflation rate is different from thatused by other institutions. We have every reason to affirm that the inflationrate in 2012 would be very low, and this would be not a good sign,” said TranVan Thanh, CEPR’s Director.

Thanh and his associates conducted a survey with the available information tofind out the possible performance of the inflation. They believe that a newperiod of very low inflation rate is coming. Especially, the inflation ratewould be minus in the upcoming months.

Thanh, when citing the figures, has shown that the monthly inflation is on thedownward trend, which happened only in some months of 2000 over the last 15years.

The economic scenarios drawn up by Thanh and his colleagues both forecasted thatthe economic growth rate in 2012 would be the lowest one since 2000.

In the first scenario, the economy would grow very slowly with the total demandexhausted. Therefore, the economic growth rate would be 4.4 percent only.

The second scenario, with higher economic growth rate, is believed to take placeif the current macroeconomic problems are removed. However, the growth ratewould be low at 5.1 percent.

With such the low economic growth rates, the inflation rates are believed to bebetween 4.6-6.2 percent.

At the same time of the last year, the World Bank and Asian Development Bankpredicted that Vietnam’s inflation in 2011 would be 13-14 percent, while someother institutions predicted 12 percent. Meanwhile, only VEPR gave the warningthat the inflation rate in 2011 would be 18-19 percent at minimum.

The economists then disagreed with VEPR’s forecast. However, it was right, asthe inflation rate in the whole 2011 reached 18.12 percent as forecast by VEPR.

Meanwhile, National Assembly’s deputies express their worry about the deflationto occur in 2012 at the ongoing National Assembly’s session.

“If deflation occurs, this would cause shocks to the national economy, hinderthe efforts to create more jobs, eliminate hunger and reduce poverty,” warned DrTran Du Lich, Member of the National Assembly’s Economics Committee.

Lich said that if nothing special happens in the world market, and if thepurchasing power remains weak in the last 7 months of the year--like it was inthe first five months, and even if the Government does not do anything to curbthe inflation, the CPI would not increase by more than five percent in 2012.

The General Statistics Office has announced that the CPI in May increased by0.18 percent over April.