Vietnam - Economic woes

by **BobHelm** » February 18, 2011, 4:43 pm

Most of this area of the world has come out of the economics crisis caused by western banks rather well.
The one exception seems to be Vietnam.
Although the growth rate there would be envied by most economically 'developed' countries they seem to have an ongoing issue with inflation. This is not exactly a new issue with them, but it does seem to be a problem that is more than stubborn to solve.
Last week they devalued the dong by 8.5% against the USD - that is the 4th. time in 14 months.
They also increased the banks' recapitalisation rate to 11%. This is the rate that the central bank recharges to commercial banks when it lends them money. This is up from 8% in early November.
Vietnam's' inflation rate in January was up to a heady 12.17%, worse however is that was a steady rise from the 11.75% in December.
So yesterday it took the further measure of raising the Bank Rate by 2%, up to 11%.
It is pretty obvious from these moves that Vietnam is trying to squeeze credit to the limit & that it sees inflation as a direct result of people overspending on credit. Indeed credit grew in Vietnam by almost 28% in 2010 & the central bank target for 2011 is still a pretty massive 23% growth.

These are strong financial measure being taken. Indeed I think that most major democracies would bulk at taking actions like this as they would represent political suicide. However, strong though the measures have been that do not exactly seem to be solving the issue.

China also has its' own inflation issues, ones that it also takes very seriously says it will resolve. Although it is not reasonable to compare to the two countries, or economies, Vietnam does rather suggest that it will not be an issue China can cure by just clicking its fingers ...

by **RLTrader** » February 18, 2011, 7:50 pm

Ah, inflation. Seems when I check prices here in Thailand, they keep going up, just look at gas prices, or food prices. Then I read that inflation is low and that everyone is worried about deflation. I can see why, after the financial crash of 08, and american house prices tumbling, one would expect, americans are buying less, so therefore prices should come down, well makes sense to me.

Being on a fixed income, I see deflation as a good thing, although what I read, says its bad in the long run, but for who. My answer is , but I’m as old as dirt, so for me, its good. It seems to me that in the old days, a 3% or 5% markup was to be expected. Not sure about other companies, but Apple seems to be more happy with 60% markup. Criminal!

A short rant.

Been searching for a compressor so that I can do a couple of projects for a year or two now, and every time I check, the price seems to go up, we are not talking a few baht, but hundreds. Started checking again this week, and my preferred store, Tool Pro, beside screwing up a well setup store, jumped in price again, so very disappointed. Next stop Global, on the way ran into my electrician and ask him for the best place to buy, but went into Global to check the prices. The difference before between Tool and Global was a few baht, maybe 10 baht, now about 500 baht.

So today went to the small shop in downtown Udon suggested by my electrician and saved 720 baht over the price at Global for the very same item and model, and the guy spoke good english and was very helpful, people at Global are helpful sometimes, but speak english not lately. So for what I would have paid at Global, got all the extras one needs. There was also no problem taking my credit card and no extra charge.

End rant.

Just maybe Vietnam is going the wrong way with the dong? At least Thailand has seemed to have stabilized the Baht?

Vietnam - Economic woes

Vietnam - Economic woes

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