Vietnam: Inflation rate

1986-
DoiMoi Policy

2008-
Financial and Global
Crisis
2001-
U.S.-Vietnam Bilateral
Trade Agreement

Source: https://knoema.com/atlas/Viet-Nam/Inflation-rate
Vietnam was a small and outdated agrarian country. From the national unification in 1975 to
1985, the nation struggled with its five-year plans on collectivization of agricultural and
industrial production. However, the real results were often far behind expectation because the
guiding principles "violated the most important motivation for production development, that it
is worked against the working people's vital vested interests

Upon the failure of the 1985 price-wage-currency adjustment scheme, a severe economic crisis
followed, resulting in hyperinflation of 775% in 1986, scarcity of staples and consumer goods,
impoverished living conditions, industrial stagnation, and mounting foreign debts The chaos had
put the CPV under immense pressure to get the country out of the crisis, and Doi Moi policies
were an answer introduced in 1986. However, Doi Moi leaders demonstrated some remarkable
entrepreneurial characteristics in their economic thinking and implementation about the
adoption of a multi-sectoral economy based on different types of ownership, encouraging for
foreign investments, foreign trade.

By December 2001, entry-into-force of the Bilateral Trade Agreement (BTA) between the U.S.
and Vietnam is a significant milestone for Vietnam's economy. Implementation of this
agreement, which includes provisions on trade in goods, trade in services, enforcement of
intellectual property rights, protection for investments, and transparency, is fundamentally
changing Vietnam's trade regime and helping liberalize its economy.

Vietnam's economic growth rate slowed to 5.9 percent and annual inflation soared in 2011 even
as the government focused on fighting higher prices by tightening bank lending. Vietnam's
economy grew at a slower pace of 5.9 percent in 2011, compared to 6.78 percent. Despite the
inflation situation, Hanois central bank, the State Bank of Vietnam, made cuts to several key
interest rates last week that went into effect on December 24th. This includes cutting the
discount rate to 7% from 8%, a 1% cut to the refinance rate, and similar 1% cuts to agriculture
lending rates and the short term deposit ceiling. This is the sixth time in the last year that
Vietnam has cut interest rates.

To synthesize the aforementioned data, Vietnams inflation is greatly influenced by political

intervention. From the adoption of Doi Moi in 1986 by the CPVs Sixth National Congress to
present day, Vietnam's economy has transformed from a centrally-planned model to market
oriented with four characterized sub-periods. Vietnam, therefore has a difficulty in maintaining
the price stability and the available resources are important to understand what has been
driving this high inflation. While it is known that Vietnam is experiencing double-digit CPI
inflation again, this has shown a significant bearing on the macroeconomic as well as the policy
outlook for again the factors of inflation above is politically motivated.
Sources:
http://thediplomat.com/2012/12/2012-a-tough-year-for-vietnam/