Dr Tran Hoang Ngan, Deputy President of the HCM City Economics University, said that though the world’s economy has shown signs of recovering, but the recovery is not really stable as many countries have negative growth rates.

The US economy, though witnessing positive changes, still has many latent risks. It remains unclear if the US Government will decide to keep the dollar weak or strong. A weak dollar will lead to the price increases for many kinds of goods. The crude oil price is also likely to increase. In this scenario, Vietnam’s CPI is not likely to stay at a single-digit level. However, if the scenario goes the other way, Vietnam’s CPI will not be high.

However, Ngan thinks that the scenario, in which the prices of goods increase in 2010, is more likely to happen. The scenario, together with the demand stimulus policy, means the CPI will hit 12-13 percent.

However, Ngan stressed that the 12-13 percent CPI increase would not be a worrying thing. When the Government applies the measures to revive the national economy, it would be understandable if the inflation rate increases.

Ngan advocates the Government’s decision on extending the medium and long term two percent interest rate subsidy in 2010. He said that a lot of businesses are still experiencing difficulty and the sudden end of support packages will make it harder for them to recover.

“The support package may lead to a higher inflationn rate, but it would be a reasonable price for economic recovery,” Ngan said.

Regarding the price increases of many goods, including rice, Ngan believes that this is a good thing for Vietnamese farmers. He does not think that Vietnam’s economy will have to suffer unfortunate consequences from the price increases.

Meanwhile, Dr Nguyen Quang A, a renowned economist, said that the CPI increase will depend on many factors, including the feeling of consumers. A thinks that the Government is taking suitable moves to help the economy recover and he does not think that inflation in 2010 will be as high as in 2008, though it will be higher than 2009.

A said that the overly high worries about the high CPI in 2010 will cause harm, because it will encourage businesses to try to hoard more goods, which will lead to the short supply and steep price increases.

Meanwhile, Vu Dinh Anh, Deputy Head of the Price and Market research Institute under the Ministry of Industry and Trade, says the CPI increase will be 2-3 percent in December 2009, much higher than November’s increase (0.55 percent). Anh believes that the CPI increase will be 7-8 percent in 2009 over the previous year.

Source: VietNamNet/TBKTSG