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Home > Vietnam News List 
June 30, 2008
Inflation in Vietnam is likely to slow, JPMorgan Chase & Co. and HSBC Holdings Plc. said, as food prices moderate and economic growth slows.
The annual inflation rate in Vietnam jumped to 26.8 percent in June, according to government figures released Sunday, up from 25.2 percent in May.
The figure has not declined since January 2007.
Prices rose 2.1 percent in June from the previous month after increasing 3.9 percent in May from April.
“The monthly rise was more subdued than the previous month, largely reflecting lower rice prices,’’ Matthew Hildebrandt, an economist at JPMorgan Chase in Singapore, said in a note late last week.
“Month-on-month increases in inflation should be more moderate, paving the way for stabilization and then modest reduction in over-year-ago inflation later this year.’’
The monthly inflation figure should be lower in July than in June, wrote Pieter van der Schaft, head of Asian rates strategy at HSBC in Hong Kong.
“We expect a further improvement in headline inflation, potentially to a flat month-on-month reading,’’ wrote van der Schaft, in a report dated Friday.
There are “clear signs of a slowdown in headline inflation,’’ according to HSBC.
The inflation rate will decline to below 10 percent by 2010, Prime Minister Nguyen Tan Dung said in an interview last week.
Slower inflation as well as evidence of a declining trend in Vietnam’s trade deficit may ease investor concerns about an overheating economy, Standard & Poor’s has said.
Vietnam’s trade gap expanded at a slower rate through June than through May, according to figures released recently by the General Statistics Office in Hanoi.
The trade deficit will probably show more improvement in July, according to van der Schaft of HSBC, who cited a lifting of restrictions on rice exports amid expectations of a possible record harvest.
Vietnamese rice exports rose 6 percent by volume through June to 2.51 million tons, and surged 99 percent by value to $1.51 billion, according to government figures.
The June economic figures were “modestly positive,” and sentiment toward Vietnamese markets was also buoyed by the government’s decision to widen the daily trading band for the nation’s currency to 2 percent on either side of a daily reference rate, said Hildebrandt in his note.
The widening of the dong band “suggests increased confidence by the authorities in their official rate,’’ Hildebrandt wrote.
Han Ngoc Vu, Hanoi-based general director of Vietnam International Commercial Joint-Stock Bank, known as VIB Bank, said “This is a good move by the central bank,”
“The Vietnamese government doesn’t plan to let the dong depreciate, therefore the country isn’t going to make any policy that may disrupt the economy.”
Although inflation is still high, the lower pace of consumer price increases in June shows the government’s measures to curb inflation are beginning to be effective, according to Vu.
“The government has reaffirmed its tight demand-management policies to control inflation,” Pham Do Chi, chief economist of Ho Chi Minh City-based Vina Capital Investment Management Ltd., also said via an e-mail to Bloomberg late last week.
“Inflationary pressures may be less in the second half of this year, with less pressure from food prices, thanks to the confirmed good harvest this year.”
Vietnam inflation likely to ease, JPMorgan, HSBC say
June 30, 2008
Inflation in Vietnam is likely to slow, JPMorgan Chase & Co. and HSBC Holdings Plc. said, as food prices moderate and economic growth slows.
The annual inflation rate in Vietnam jumped to 26.8 percent in June, according to government figures released Sunday, up from 25.2 percent in May.
The figure has not declined since January 2007.
Prices rose 2.1 percent in June from the previous month after increasing 3.9 percent in May from April.
“The monthly rise was more subdued than the previous month, largely reflecting lower rice prices,’’ Matthew Hildebrandt, an economist at JPMorgan Chase in Singapore, said in a note late last week.
“Month-on-month increases in inflation should be more moderate, paving the way for stabilization and then modest reduction in over-year-ago inflation later this year.’’
The monthly inflation figure should be lower in July than in June, wrote Pieter van der Schaft, head of Asian rates strategy at HSBC in Hong Kong.
“We expect a further improvement in headline inflation, potentially to a flat month-on-month reading,’’ wrote van der Schaft, in a report dated Friday.
There are “clear signs of a slowdown in headline inflation,’’ according to HSBC.
The inflation rate will decline to below 10 percent by 2010, Prime Minister Nguyen Tan Dung said in an interview last week.
Slower inflation as well as evidence of a declining trend in Vietnam’s trade deficit may ease investor concerns about an overheating economy, Standard & Poor’s has said.
Vietnam’s trade gap expanded at a slower rate through June than through May, according to figures released recently by the General Statistics Office in Hanoi.
The trade deficit will probably show more improvement in July, according to van der Schaft of HSBC, who cited a lifting of restrictions on rice exports amid expectations of a possible record harvest.
Vietnamese rice exports rose 6 percent by volume through June to 2.51 million tons, and surged 99 percent by value to $1.51 billion, according to government figures.
The June economic figures were “modestly positive,” and sentiment toward Vietnamese markets was also buoyed by the government’s decision to widen the daily trading band for the nation’s currency to 2 percent on either side of a daily reference rate, said Hildebrandt in his note.
The widening of the dong band “suggests increased confidence by the authorities in their official rate,’’ Hildebrandt wrote.
Han Ngoc Vu, Hanoi-based general director of Vietnam International Commercial Joint-Stock Bank, known as VIB Bank, said “This is a good move by the central bank,”
“The Vietnamese government doesn’t plan to let the dong depreciate, therefore the country isn’t going to make any policy that may disrupt the economy.”
Although inflation is still high, the lower pace of consumer price increases in June shows the government’s measures to curb inflation are beginning to be effective, according to Vu.
“The government has reaffirmed its tight demand-management policies to control inflation,” Pham Do Chi, chief economist of Ho Chi Minh City-based Vina Capital Investment Management Ltd., also said via an e-mail to Bloomberg late last week.
“Inflationary pressures may be less in the second half of this year, with less pressure from food prices, thanks to the confirmed good harvest this year.”