The slowdown in GDP growth in the first quarter of 2011 is not necessarily evidence that the recent tightening measures are biting yet. Indeed, Vietnam's twin problems of rising inflation and a widening trade deficit intensified in March. Inflation poses the more immediate problem. The consumer price index (CPI) rose by 13.9% year on year in March, compared with 12.3% in February, according to the GSO. On a month-on-month basis the CPI rose by 2.2%, the biggest monthly increase since May 2008, as rising fuel and energy prices have pushed up the cost of a wide range of products. In the breakdown of CPI, food prices rose by 18.3% year on year, while prices for beverages and cigarettes rose by 10.8%. Garments and footwear prices rose by 9.9%, and housing and construction material costs soared by 16.9%. Meanwhile, education costs, an important part of the index, rose by 24.3% year on year.

The merchandise trade deficit remains wide. In the first quarter export revenue increased by 33.7% year on year, to US$19.2bn, but the import bill stood at US$22.3bn, a year-on-year increase of 23.8%. The deficit of US$3.1bn was only slightly lower than that recorded in the year-earlier period, of US$3.3bn.