HANOI, March 1 (Reuters) - The policy response Vietnam unveiled last week to tackle soaring inflation is appropriate but the authorities might have to lower their gross domestic product growth target, the Asian Development Bank said on Tuesday.
“The Vietnam policy measures... are a very appropriate policy response,” ADB President Haruhiko Kuroda told a news conference in Hanoi.
“Lowering the inflation rate may require a downward adjustment in the growth target in the short term, which is necessary to ensure macroeconomic stability,” he said.
Vietnam’s official GDP growth target for the year is around 7 percent. The economy grew 6.8 percent last year but inflation jumped. The annual rate stood at 12.3 percent in February. Last week the government announced several steps to tighten monetary and fiscal conditions in a bid to bring down inflation, restore confidence in the currency and narrow trade and fiscal deficits. [ID:nSGE71N02M]
The package came after a devaluation of the currency on Feb. 11, followed by an increase in two key interest rates.
Around the region, Kuroda said, governments must pursue sustainable growth and rely less on external demand.
Rising oil prices, exacerbated by turmoil in the Middle East and North Africa, would generally be negative for the countries in the region but “on balance Vietnam could benefit” as an oil and food commodity exporter, he said. (Reporting by John Ruwitch and Ngo Thi Ngoc Chau; Editing by Alan Raybould)