Single-digit inflation targeted, growth at 5.2%

Single-digit inflation targeted, growth at 5.2%

“The government will stick to a single-digit inflation target in 2012, while maintaining economic growth rate at 5.2 percent,” said a senior state official.

The recent consumer price index (CPI) rise of 2.2 percent is mainly due to increasing health services which made up nearly 1 percent, plus the contribution of educational services – the opening of the new school year, and recent petroleum product price hikes,” said Vu Duc Dam, Minister - Chairman of the Government Office at a regular press conference in Hanoi.

Facing rising CPI, the government has conducted several meetings to consider solutions to tackle high inflation in case it returns.

The government has reconfirmed that curbing inflation is a priority for this year and the next year.

The latest CPI increase is partially due to seasonal factors, while the operation of the national monetary policies remains under tight control to ensure inflation this year is still within the single-digit target, Dam said.

Inflation will reach the target of about 8 percent, as there are still more rooms for policy maneuverability. The inflation rate in the first 9 months of this year is low - at 5.13 percent.

Regarding solutions to control inflation, Prime Minister Nguyen Tan Dung has asked state agencies to promote credit growth, while tightly controlling the money supply – M2, maintaining the stability in exchange and interest rates.

Specifically, interest rates should not to be pushed up further.

The Prime Minister has also stressed the importance of maintaining the single-digit inflation target and macroeconomic stability, not only for 2012 but also for the next year, for sustainable development of the country.

Regarding fiscal policies, the government will try to keep the budget deficit at 4.8 percent.

The government will also consider flexible policies to attain the targeted growth rate of 5.2 percent.

“To achieve the annual 5.2 percent growth rate, the growth rate must be at over 6.5 percent in the remaining months of the year,”

The national economy was estimated to grow 4.73 percent year on year in January-September, slowing from a 5.77-percent annual growth in the same period last year, said the government.

Slow growth is the result of tightened monetary and fiscal policies applied in the early months of the year aimed at curbing inflation. Inflation peaked to nearly about 23 percent in August 2011.

GDP growth in the third quarter of this year is estimated at 5.35 percent, up 0.69 percent quarter on quarter.

Fitch Ratings has forecast Vietnam's economy will grow about 5 percent this year, compared with 2011's 5.89 percent, according to Reuters.

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