* Vietnam planning minister say inflation fight "top"
* Inflation in region must be "carefully managed" -ADB
* Capital flows, commodity prices to figure in Hanoi
(Adds context, quotes)
By John Ruwitch and Tran Le Thuy
HANOI, May 3 Vietnam said on Tuesday fighting
inflation took precedence over growth and as a result GDP would
miss the official target, underscoring a key concern for the
region as Asian officials met in Hanoi to discuss ways to pursue
a sustained upturn.
Rising prices across the region must be "carefully managed"
via a mix of policies to minimise the impact on Asia's vast
population of poor people, Asian Development Bank President
Haruhiko Kuroda said at the start of the ADB's annual meeting.
All major economies in the region have tightened monetary
policy to contain inflationary pressures that have built up
during a strong recovery from the global crisis.
On Tuesday, the Reserve Bank of India said fighting
inflation was the priority as it raised interest rates by a
higher-than-expected 50 basis points.[ID:nL3E7G30NW]
Volatile capital flows and surging commodity prices will be
key topics of discussion when finance ministers from East Asia's
top three economies -- China, Japan and South Korea -- meet with
their Southeast Asian counterparts on Wednesday.
"The top priority is to fight inflation. We are no longer
prioritising GDP growth. We want to keep GDP growth at a
reasonable level that is acceptable in this inflation
situation," Vietnam's Minister of Planning and Investment Vo
Hong Phuc said.
Growth was now expected to be 6.5 percent and inflation
11.75 percent in 2011, Phuc told a forum at the Asian
Development Bank's (ADB) annual meeting in Hanoi.
The official targets, approved by parliament, are for 7-7.5
percent gross domestic product growth and inflation of 7 percent
or less this year.
Vietnam's consumer price index rose 17.51 percent in April
from a year earlier after rising an annual 13.89 percent in
March, and is the highest among the major Asian economies.
Vietnamese authorities have raised various interest rates
several times since mid-February, trimmed the official credit
growth target for the year, cracked down on black market foreign
currency trading and vowed fiscal spending cuts.
Other Asian economies are also struggling with inflation
pressures, particularly from rising oil and food prices.
"Inflation will need to be carefully managed using a mix of
policy measures, especially given the harder impact of inflation
on the poor which in Asia still number in the hundreds of
millions," ADB President Haruhiko Kuroda said.
The ADB warned last month economic overheating and inflation
threatened a sustained recovery in parts of developing Asia, and
said a sustained rises in food prices could pull tens of
millions into poverty.[ID:nL3E7F60B1] [ID:nL3E7FQ4EM]
India's central bank raised interest rates on Tuesday by a
higher-than-expected margin and said fighting inflation was its
priority even at the expense of short term growth.
The region's outperformance since the global financial
crisis has also drawn large amounts of foreign capital seeking
returns unavailable in most developed economies.
Those capital flows have seen currencies strengthen,
something the export-driven region has traditionally resisted,
and complicated policymaking by adding to domestic money
supplies. Stronger currencies have also mitigated the impact of
higher dollar prices for food and fuel.
"Currency fluctuation has been a serious problem in Asia
Pacific, particularly in east Asia, including southeast Asia,"
Kuroda, speaking to reporters at the ADB's annual meeting in
Hanoi, said the bank's long-held position was that capital
controls were acceptable in some circumstances, but should not
be an "usual, ordinary or frequently used" tool. South
Korea's finance minister said the government was not considering
restrictions on non-deliverable forwards or imposing new capital
controls beyond recent steps. [ID:L3E7G30K0]
"We will focus on the existing three-way measures and are
not considering introducing new measures," Yoon Jeung-hyun said
in an interview.
(Additional reporting by Yoo Choonsik; Editing by John Mair)