The rise disappointed analysts who had hoped for a sharper drop after high inflation rates in January and February, and made it unlikely the government could meet its target for the year.

"It is impossible for the government to keep the inflation rate under 7 per cent this year," said economist Nguyen Quang A, former director of the Institute for Stable Development in Hanoi. "This inflation rate is very sad news."

Quang A said the government was correctly prioritizing macroeconomic stabilization, but had not acted in a timely fashion. He pointed to the decision to devalue the dong in late November and then again in February, which some analysts said created inflationary expectations of further devaluations.

He also criticized the timing of recent hikes in state-controlled energy prices.

"It is necessary to allow technocrats to have a voice in making decisions in finance and banking," Quang A said. "The decisions should not be too closely held by politicians or executive bodies."

Minister of Finance Vu Van Ninh last week told the National Assembly inflation would likely rise 0.5 to 0.6 per cent in March.

On Monday, State Bank Governor Nguyen Van Giau said the economy was expected to show growth of 6 per cent year-on-year for the first quarter, slightly higher than official forecasts.

Analysts have warned that Vietnam risks a serious inflation spiral due to credit expansion of 37 per cent in 2009. That was driven largely by government stimulus spending intended to counteract the global economic slowdown.

Deutsche Presse Agentur - March 24, 2010

Vietnam trade deficit in first quarter tops expectations

Hanoi - Vietnam ran a trade deficit of some 3.6 billion dollars in the first quarter of the fiscal year, a billion dollars higher than the government had predicted, state media reported Thursday.

The deficit represents over 25 per cent of the value of the country's exports, exceeding a government target of 20 per cent.

The state-run newspaper Lao Dong quoted statistics from Vietnam's Ministry of Planning and Investment as saying imports rose 38 per cent in the first quarter year-on-year, to over 17.6 billion dollars, while exports fell 1.6 per cent, to 14.1 billion dollars.

Last month, the ministry forecast Vietnam's exports in the first quarter at 14.2 billion dollars, with imports of 16.8 billion dollars. That put the expected trade deficit at 2.6 billion dollars.

The newspaper said the value of crude oil exports dropped 47 per cent compared with the same period last year.

Last year, Vietnam ran a trade deficit of 12.2 billion dollars, down from 17.5 billion dollars in 2008. The 2009 deficit represented 13 per cent of Vietnam's nominal gross domestic product of 91.8 billion dollars.

Vietnam's largest trade deficit was with neighbouring China, totaling 11.5 billion dollars.

Deutsche Presse Agentur - March 24, 2010