Vietnam inflation slows, foreign investment surges

Tuesday, October 28, 2008

HANOI, Vietnam: Vietnam’s inflation rate eased to 26.7 percent in October as global oil and commodity prices fell but remains one of the highest in Asia, according to government figures released Tuesday.

Despite high inflation, Vietnam continues to attract record foreign direct investment commitments as investors believe the country’s long-term growth prospects are sound. Pledged foreign direct investment from January to October totals $58.3 billion, up nearly six times from the same period of last year, the General Statistics Office said.

The consumer price index has now fallen for two consecutive months after reaching a 17-year high of 28.3 percent in August, the statistics office said in a statement. Vietnam usually releases economic data before the end of the reporting period based on estimates.

The government has cut fuel prices several times since August following a steep fall in the global price of crude oil. The consumer price index fell 0.2 percent from September.

Vietnam’s economy has grown rapidly over the last decade, powered by an influx of foreign capital, but began overheating last year. The economy grew 8.5 percent last year but slowed to 6.5 percent in the first nine months of this year, hit by government efforts to tame rampant inflation and a swelling trade deficit.

Food prices in September surged 40.6 percent from a year earlier and the cost of housing and construction materials jumped 22.8 percent.

Prime Minister Nguyen Tan Dung said earlier this month that the government expects inflation for 2008 to be 24 percent.

As of Oct. 22, some 953 new projects have been licensed this year, the GSO said.

Malaysia topped the list of investments by country, with investment commitments totaling $14.9 billion so far this year. The bulk that figure comes from a $9.79-billion steel mill project licensed in September.

Taiwan came second with $8.6 billion of investment commitments, followed by Japan with $7.3 billion.


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