[SingViet]

HANOI: For Vietnam's once-booming economy, it's a perfect storm of fiscal woes. Skyrocketing double-digit inflation and stagnant wages are causing frequent labour strikes as the working poor spend most of their income on food.

Stocks have lost 60 per cent of their value since the beginning of the year causing many new investors to lose their shirts.

With prices of consumer goods doubling every month, shoppers at Hanoi's Hom Market said they are coping by buying smaller quantities of meat and other commodities.

But for some, patience, not anger, prevails.

Nguyen Thanh Minh, who has been selling clothes for almost 20 years said she's lucky to not have to get by on a fixed income.

She said: "We are listening to the radio and reading the newspaper everyday, paying special attention to economic issues like inflation and the stock market. Anyway, Vietnamese have a long tradition of trusting and believing in the leadership of the party and government. In daily life, we are patient and accustomed to suffering."

Chu Minh Trang, a student, said: "Of course, this situation affects a lot of Vietnamese right now. It's a market economy under a socialist oriented government and it's going through a transitional period. But inflation definitely affects all aspects of life."

Others said they've witnessed economic crises before but nothing quite as severe.

Dang Thi Hai, a food vendor, said: “It may be easier for traders or businessmen, but it's very hard for workers. Their salary is very low and school fees are high. In the past, they were able to save but not now. They have to spend everything they earn down to the last dong."

Economists are concerned that Vietnam's skyrocketing inflation could foretell a complete economic meltdown if the government doesn't step in with emergency measures. One particular worry is the Dong which currency traders fear could lose more than one-third of its value against the dollar over the next 12 months.

The central bank has raised interest rates and the government has cancelled or postponed about 1,000 public investment projects so far.

Nguyen Quang A, Economist, Institute of Development Studies, said: "Six months ago, the government still insisted on high growth rate. Three months ago, they changed their mind very quickly and put fighting inflation to be the top priority, to stabilise the macroeconomic situation."

Economists are confident the macroeconomic fundamentals which made Vietnam so attractive to foreign investors in the past are still holding.

First quarter figures put foreign investment at over five billion US dollars, up 36 per cent from the same period a year ago.

But given the escalating economic problems facing the country, analysts said it will be up to Vietnam's policymakers to move quickly and transparently to ensure Asia's newest tiger returns with a roar. -CNA/vm