Vietnam Hopes for Single-Digit Inflation

Vietnam expects to get inflation this year below 10% by sharply raising its interest rates; for example, the rate the central bank pays commercial banks on their surplus funds was raised this week five percentage points to 12%.

The government now says increased electricity and gas prices will push the year’s CPI up by 2.5% while food prices will drop a similar amount.  The government’s resolve to curb credit growth also is predicted to reduce total money supply and also put a brake a inflation.

In addition, Vietnam is fighting persistent inflation by reducing public investment and  overspending, another welcome development to foreign investors who are anxious about Vietnam’s serious short-term economic challenges. 

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