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Price hike, trade deficit tarnish economic picture in past seven months

Despite overall expansion in the first seven months of the year, the national economy is facing great challenges from increasing consumer price index (CPI) and trade deficit.
According to the General Statistics Office (GSO), the nation’s CPI for July surged by 8.39 percent over 2006, the highest in recent years. At this rate, CPI growth is forecast to surpass the interest rate of saving deposits and may be even higher than this year’s national economic growth. According to experts, rising CPI is attributable to the jump in the prices of essential commodities including petrol, power, food and construction materials as well as the increasing amount of currency circulated on the market due to overseas remittances and banks’ stocking up foreign currency reserves. Meanwhile, the country’s trade deficit reached 5.2 billion USD in the past seven months as import value spiked by 29.8 percent and export turnover rose by only 19.6 percent. The trade ministry blamed the rising trade deficit on the sharp increase in the import of automobiles, steel, chemicals and computer accessories and the strong fall in crude oil export. The ministry said measures are needed to boost export, control imports and stabilize prices in the remaining months of the year in order to keep up the achievements in the last seven months, which included a 17 percent increase in industrial production and a 49.8 percent rise in foreign investment inflow. (Source: VNA)

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