Economists warn Vietnam headed for double-digit inflation

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After consumer prices rose 1.25 percent last month, analysts warned that the government is unlikely to keep inflation at below 6 percent this year.

Voice of Vietnam radio quoted economists as saying that a double-digit rise in prices is possible this year, posing more challenges to the government's attempts to stabilize the economy.

The government hopes to keep inflation at below 6 percent, but prices could rise 10 percent this year, Nguyen Duc Thanh, head of the Vietnam Center for Economic and Policy Research (VEPR), said at a recent conference.

A recent hike in power tariffs by 5 percent to VND1,437 (US6.9 cents) per kilowatt-hour, and a proposed 10 percent increase in minimum wages to VND1.15 million ($55) in July would "definitely" push prices up, he said.

He also pointed to the government's loosening of monetary policy in the form of five interest rate cuts since last year.

Luu Bich Ho, head of the Ministry of Planning and Investment's Development Strategy Institute, said accelerating inflation would be more frustrating news for investors.

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In a report, VEPR forecast little significant improvement in economic outlook this year, and for growth to rise slightly to 5.2-5.3 percent.

The government would have to make huge efforts to stabilize the economy and to help small and medium-sized manufacturing firms, it said.

Besides providing businesses easier access to loans, the central bank should be proactive in depreciating the dong by 3-4 percent against the dollar to boost exports, he added.

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