Bangkok--3 Mar--Standard & Poor's The heat generated by Vietnam's blistering economic growth may soon become too uncomfortable, said Standard & Poor's Ratings Services today. With consumer prices rising at a high of 15.7% in February 2008, Vietnam's policymakers are in a tight spot. Macroeconomic risks will escalate if high inflation is allowed to become entrenched. On the other hand, investments needed to boost long-term economic potential will be held up if the authorities come down heavily on inflation. Recent announcements by the government suggest that it remains undecided. However, for the credit ratings on the government, (foreign currency BB/Stable/B; local currency BB+/Stable/B) macroeconomic stability is more important than maintaining current high levels of economic growth. High inflation discourages private sector investment, constrains financial sector development, and weakens popular support for the government (see commentary titled "Inflation Poses Challenges And Opportunities For Central Banks In Developing Asia," published on RatingsDirect on Feb. 14, 2008). We do not expect high inflation to result in a sovereign credit rating downgrade in the next one to two years unless it accelerates much further. However, support for the government's creditworthiness could be eroded if the inflation rate does not retreat from the current level in this period. Media Contact: David Wargin, New York (212) 438-1579 [email protected] Analyst Contacts: KimEng Tan, Singapore (65) 6239-6350 Elena Okorotchenko, Singapore (65) 6239-6375