VIETNAM, September 17 – Le Viet Dung
According to Nguyễn Quốc Việt, deputy head of the Vietnam Institute for Economic and Policy Research, the economy of HÀ NỘI – Việt Nam has a positive outlook for 2022 despite the emergence of omicron subvariants, global geopolitical tensions and rising input costs.
He spoke yesterday at the “Inflation in 2022: Impacts and Policy Recommendations” workshop.
Việt said inflationary pressures have started to build but the situation is under control so far. The eight-month consumer price index (CPI) rose just 2.58 percent year-on-year, well below the 4 percent target.
GDP growth reached 7.7 percent in the second quarter, the highest quarterly growth in a decade. The eight-month industrial production index was 8.3 percent higher than the same period in 2021.
Exports fared reasonably well amid the global trade slowdown, with eight-month sales of $250.8 billion, up 17.3 percent year-on-year. Of these, textiles are likely to continue to advance in the rest of 2022 thanks to free trade agreements.
He said inflationary pressures would ease if global food and fuel prices cool and supply chain disruptions improve in the near term. He forecast that Việt Nam’s inflation will remain at around 3.3 to 3.8 percent this year.
Regarding the discrepancy between consumers’ perceived inflation and the General Statistics Office’s (GSO) estimated inflation, Việt told Việt Nam News that the discrepancy was due to the underweight to fuel, food and transportation costs in the CPI basket.
“The weights assigned to fuel, food and transportation costs in the CPI basket in Việt Nam are lower than those in ASEAN+3,” he said.
Cấn Văn Lực, chief economist at BIDV, suggested using the producer price index and core inflation in addition to the CPI to track down the real causes of inflation, which could be cost-related or monetary-related.
He said inflation in Việt Nam has not peaked due to time lags and forecast inflation will continue to rise towards the end of the year.
Regarding the weights assigned to items in the CPI basket, he said the weights are adjusted every five years. For example, the weight of food is currently 33.6 percent, down from the previous weight of 36 percent.
He also said the government has done a pretty good job of curbing inflation by stabilizing fuel prices and controlling the food supply.
The two measures were highly effective against rising prices, as transportation costs, food prices and building material prices accounted for 90 percent of the increase in CPI.
Economist Vũ Đình Ánh claimed Việt Nam has put macroeconomic stability high on the agenda. Rapid economic growth at the expense of stability is never an option.
“We paid a heavy price for the macroeconomic instability between 2006 and 2011,” he said.
The expert advocates higher caps for credit growth. He underscored credit growth caps as an administrative tool to increase overall credit, which he said is safer than market-based tools in terms of systematic stability.
He also said the tool could facilitate the restructuring of the banking system by giving healthy banks higher credit ratios and less healthy banks lower credit ratios, encouraging competition in the industry. — VNS
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