Ernst & Young also pointed out other reasons linked to the risks of further Vietnam dong devaluation that would limit the loosening of monetary policy in the first half of 2012 and higher investment dependent on a difficult redirection of credit away from the public sector and reform of State enterprises.

The global provider of assurance, tax, transaction and advisory services did not project the devaluation of the Vietnam dong but said Vietnam’s inflation would be below 10 percent in 2013. “2012 will be another year of above-target inflation and below-trend growth,” the forecast said.

In its latest quarterly business climate index survey publicized last week, the European Chamber of Commerce in Vietnam (EuroCham) said nearly 250 member companies participating in the survey estimated the Vietnam dong would depreciate some 8.33 percent and 53 percent of them expected inflation to impact their business significantly this year.

The Government is trying to pull inflation down below 10 percent for this year from around 18.58 percent last year, which was higher than the revised target of less than 17 percent. The consumer price index in the first month of this year rose 1 percent over December last year, according to the General Statistics Office.

At a meeting in early January, the Government unveiled the 2012 GDP target of 6 percent – 6.5 percent that was higher than 5.89 percent in 2011 and export revenue expansion by some 12 percent over last year when outbound sales surged over 33 percent year-on-year to $96.3 billion.

According to economist Le Dang Doanh, after the Government’s meeting that the country’s GDP growth for this year would be “very good” if it was 5 percent rather than 6 percent given the euro zone debt crisis and difficulties in the US as well as internal macro-economic woes in this country.

Rain Newton-Smith, Senior Economic Adviser to Ernst & Young’s Rapid Growth Markets (RGMs) Forecast, warned in the report that any escalation of the euro zone debt crisis would have serious short-term consequences for the rapid-growth economies, but said that RGMs were much more resilient than in previous decades.

Doanh said the Government would achieve the 2012 GDP growth of 6 percent if it was able to efficiently use State capital, mobilize funds from the private sector, and control inflation among others. He noted a single-digit inflation rate this year would be a tough task and require a host of consistent and effective policies and measures, including those for monetary management and State spending as well as favorable conditions in the world.

According to Ernst & Young’s RGMs Forecast, Vietnam’s outlook for faster growth will improve in 2013, when inflation will be below 10 percent and export growth will be narrowing the current account deficit substantially.

Source: vnagency.com.vn