The Hong Kong and Shanghai Banking Corporation Limited (HSBC) hasrecently released a report on Vietnam ’s macro economy and marketprospects, affirming the decreased trend of inflation in the country.
According to the report, inflation may become aproblem again Asia later this year, but in Vietnam , things arelikely to be different.
After last year’s rapid rise, price pressures are now cooling amid slowing
demand and falling credit growth, the bank said, adding that the StateBank of Vietnam has been able to cut rates by 1 percent.
The bank commented that while easing policy rates in the midst
of a rise in international oil prices may seem premature, the cut isunlikely to reverse the downward trend in Vietnam ’s inflation.
“We also do not expect the rising oil price to significantly have animpact on inflation in 2012, assuming that oil prices do not rise above140 USD per barrel,” the bank said.
Thesharper-than-expected deceleration in prices suggests that the filteringthrough of tightening policy (Resolution 11), the easing of demandafter Tet and the base effect are all working together to keep pricepressures low.
Despite the interest rate cut, inflation should continue to decelerate to single digits by year end.
The report pointed out that one of the notable improvements for VND has come though the narrowing of the trade balance.
The overall picture has been improving for some time, with a smalltrade surplus recorded in January, which was only the second monthlysurplus in three years.
The previous VNDdepreciation has no doubt had something of an impact, but so too has thefact that Vietnam exports a lot of primary goods with stable underlyingdemand, such as rice and fish produce, which means it has suffered lessfrom the global slowdown.
Meanwhile, FDI flowshave remained relatively robust, especially from Japan . Indeed,February’s data shows more than 800 million USD in FDI from Japan toVietnam . If similar flows continue then it will provide a usefulsource of foreign exchange to the country, the report said.-VNA
According to the report, inflation may become aproblem again Asia later this year, but in Vietnam , things arelikely to be different.
After last year’s rapid rise, price pressures are now cooling amid slowing
demand and falling credit growth, the bank said, adding that the StateBank of Vietnam has been able to cut rates by 1 percent.
The bank commented that while easing policy rates in the midst
of a rise in international oil prices may seem premature, the cut isunlikely to reverse the downward trend in Vietnam ’s inflation.
“We also do not expect the rising oil price to significantly have animpact on inflation in 2012, assuming that oil prices do not rise above140 USD per barrel,” the bank said.
Thesharper-than-expected deceleration in prices suggests that the filteringthrough of tightening policy (Resolution 11), the easing of demandafter Tet and the base effect are all working together to keep pricepressures low.
Despite the interest rate cut, inflation should continue to decelerate to single digits by year end.
The report pointed out that one of the notable improvements for VND has come though the narrowing of the trade balance.
The overall picture has been improving for some time, with a smalltrade surplus recorded in January, which was only the second monthlysurplus in three years.
The previous VNDdepreciation has no doubt had something of an impact, but so too has thefact that Vietnam exports a lot of primary goods with stable underlyingdemand, such as rice and fish produce, which means it has suffered lessfrom the global slowdown.
Meanwhile, FDI flowshave remained relatively robust, especially from Japan . Indeed,February’s data shows more than 800 million USD in FDI from Japan toVietnam . If similar flows continue then it will provide a usefulsource of foreign exchange to the country, the report said.-VNA
