VINACHEM

HANOI – Inflation in Vietnam has always been higher than in any other nation in the region since the country carried out renovation, says a research project published on Tuesday.

The research shows that in all five-year periods between 1991 and 2012, Vietnam outpaced all other regional nations in only one aspect: inflation.

The research conducted by Dao Van Hung, Nguyen Thac Hoat and their colleagues at the Academy of Policy and Development (APD) was unveiled at a workshop on Tuesday. The workshop themed inflation and economic growth in Vietnam was held by APD, the Ministry of Planning and Investment and USAID.

Inflation in Vietnam was over 18% in 2011 and 6.8% in 2012, far higher than the average 3% of China, Indonesia, the Philippines and Thailand. Indonesia had the highest inflation among these nations, 3.8-5% in the last two years, still lower than the rate in Vietnam.

From 1986 to 2012, there were 13 years and four five-year periods in which inflation in Vietnam stayed at a double-digit level or above. Notably, the average inflation rate in Vietnam was 225% in the 1986-1992 period, 16.3% in 2007-2008 and 15% in 2010-2011.

Even when compared with China, Vietnam has higher inflation, while economic growth is lower, said Luu Bich Ho, former head of the Development Strategy Institute.

In the period from 2008 to 2012, Vietnam recorded an average economic growth of 5.9% per year and inflation of 12.6%, while the respective figures in China were 9.3% and 3.3%.

From 1991 to 2010, the annual economic growth in Vietnam was 7.4% on average and inflation stood at nearly 11%, while China registered 10.5% and 4.8% respectively.

Ho wondered: “How come their growth is twice as much as ours and inflation only a half?”

Pointing at the chart of inflation in 1992-2012 shown at the workshop, Nguyen Thac Hoat said: “The inflation line fluctuates widely, the peak is sharp and the amplitude is large. All of these reveal that inflation in Vietnam hasn’t been restrained in a sustainable way, and monetary and macroeconomic uncertainties remain considerable.”

Deputy Minister of Planning and Investment Cao Viet Sinh said rampant inflation in Vietnam was making lending rates and the costs of investment and doing business in Vietnam higher than other nations.

Other nations can offer low lending rates because the macroeconomic risks are small. Vietnam is in the opposite situation, he said.

After the policies aimed at curbing inflation have been adopted for quite a long time, enterprises now no longer want to do business and consumers no longer want to spend, he remarked.

“Given current high lending rates and poor consumption, enterprises deposit their money in banks to enjoy interest sums rather than making investment and doing business. Such a trend is very dangerous,” he stressed.

As one of the main authors of the Government’s economic development plans, Sinh wondered how to find financial resources to prop up the economy, especially when the credit growth target of 12%, equivalent to VND360 trillion, for this year is unattainable.

Economists said the most ideal inflation for the period from now to 2015 should be 7-7.5%. They suggested there should be an independent agency to carry out the fiscal and monetary policies in coordination with the central bank and the Ministry of Finance.