The Ho Chi Minh City Statistics Office expects consumer prices in the city to fall 0.69 percent from October, the second drop this year following lower cooking, fuel and housing costs.

A government meeting revised down its annual inflation forecast for this year to 22 percent from the 24 percent predicted earlier this year, but the Prime Minister had no illusions about the economic slouch ahead.

Ministry of Planning and Investment (MPI) officials said they still expected the economy to grow 6.7 percent this year in line with the body’s mid-year prediction.

Though global financial woes may slow the nation’s economic expansion next year, Dung said domestic growth must reach 6.5 percent “or life and work would be very difficult.”

The revision of inflation expectations was due to the effectiveness of several measures put in place to reign in consumer price hikes, said a government statement issued after the meeting.

The central bank has raised its benchmark interest rates three times this year to curb credit growth while lower world oil prices have helped Vietnamese oil product distributors cut fuel prices six times since early October.

Vietnam, which has faced double digit inflation since November last year, would see its consumer price index ease this month from October, Minister of Planning and Investment Vo Hong Phuc said at the meeting.

Phuc did not give a figure, but the price fall could mark the second drop in a row after October prices eased 0.19 percent from September, the first monthly drop since March 2007.

As an early indication of Vietnam’s inflation readings this month, the Ho Chi Minh City Statistics Office expects consumer prices in the city to have fallen 0.69 percent from October, the second drop this year following lower food, fuel and housing costs.

The government is expected to release November inflation data early next week.

The government has set next year’s inflation target at below 15 percent.

Support through the storm

The ministry said some major factors that have fueled Vietnam’s strong economic growth over the past years are now showing “signs of weakening.”

Phan Huu Thang, director of the MPI’s foreign investment department, said foreign direct investment may fall 50 percent next year from this year’s projected $65 billion, due to the global economic slump.

Next year’s overseas remittances are forecast to be halved from this year to $4 billion, while some international donors have started to shift their official development assistance from Vietnam to Africa, the ministry said.

The recession in the world’s biggest economies has cut demand for some of Vietnam’s exports and reduced revenues from crude oil, one of the country’s export staples.

Dung said Vietnam can’t afford to follow measures taken by major economies to offer stimulus packages to boost domestic consumption and exports.

The government will instead support exporters with reduced taxes, extended debts, simplified procedures and market expansion assistance, he said.

Phuc said the government would introduce measures to boost investment in the construction industry, which would “help [sell] steel and cement stockpiles, create jobs and enliven the economy.”

Prime Minister Dung added that Deputy PM Hoang Trung Hai is now in the US to persuade the world’s largest economy to reduce taxes on about 3,500 Vietnamese export products.

Source: TN, Agencies