While prestigious international institutions have warned that Vietnam’s inflation rate would be high in 2012, domestic economists believe that the inflation rate would be very low. Especially, some of them have warned against the deflation.

In the updated May’s report on the global economic prospect, the EIU of The Economist predicted that Vietnam’s inflation rate in 2012 would be 13.8 percent.

Meanwhile, in its most optimistic forecast, the World Bank has lowered the predicted inflation rate in Vietnam from 10.15 percent to 9 percent.

Prior to that, both international and domestic institutions said that Vietnam would make an exploit if it successfully curbs the inflation rate at one digit level.

However, VEPR, an economic research center belonging to the Hanoi National University, has affirmed in its report about the economic prospect in 2012 that the inflation rate would be abnormally low this year. In the most pessimistic scenario drawn up by the center’s economists, the inflation rate would be 6.2 percent.

“Maybe our method used to calculate the inflation rate is different from that used by other institutions. We have every reason to affirm that the inflation rate in 2012 would be very low, and this would be not a good sign,” said Tran Van Thanh, CEPR’s Director.

Thanh and his associates conducted a survey with the available information to find out the possible performance of the inflation. They believe that a new period of very low inflation rate is coming. Especially, the inflation rate would be minus in the upcoming months.

Thanh, when citing the figures, has shown that the monthly inflation is on the downward trend, which happened only in some months of 2000 over the last 15 years.

The economic scenarios drawn up by Thanh and his colleagues both forecasted that the economic growth rate in 2012 would be the lowest one since 2000.

In the first scenario, the economy would grow very slowly with the total demand exhausted. Therefore, the economic growth rate would be 4.4 percent only.

The second scenario, with higher economic growth rate, is believed to take place if the current macroeconomic problems are removed. However, the growth rate would be low at 5.1 percent.

With such the low economic growth rates, the inflation rates are believed to be between 4.6-6.2 percent.

At the same time of the last year, the World Bank and Asian Development Bank predicted that Vietnam’s inflation in 2011 would be 13-14 percent, while some other institutions predicted 12 percent. Meanwhile, only VEPR gave the warning that the inflation rate in 2011 would be 18-19 percent at minimum.

The economists then disagreed with VEPR’s forecast. However, it was right, as the inflation rate in the whole 2011 reached 18.12 percent as forecast by VEPR.

Meanwhile, National Assembly’s deputies express their worry about the deflation to occur in 2012 at the ongoing National Assembly’s session. 

“If deflation occurs, this would cause shocks to the national economy, hinder the efforts to create more jobs, eliminate hunger and reduce poverty,” warned Dr Tran Du Lich, Member of the National Assembly’s Economics Committee.

Lich said that if nothing special happens in the world market, and if the purchasing power remains weak in the last 7 months of the year--like it was in the first five months, and even if the Government does not do anything to curb the inflation, the CPI would not increase by more than five percent in 2012.

The General Statistics Office has announced that the CPI in May increased by 0.18 percent over April.

Source: VNN