A man shops for rice in a supermarket. Experts believe agricultural output will keep pace with domestic demand, keeping prices stable. (Photo plo.vn) Nguyen Ba Minh, head of the Institute of Economics and Finance, is relativelyoptimistic about short-term inflation.
He held that the unpredictability of the Russia-Ukraine conflict and theCOVID-19 pandemic would add uncertainty to the world’s economy, slowing downits recovery pace and driving down global material prices.
The situation would be better back home as agricultural output is expected tokeep pace with domestic demand. As farm produce weighs heavily on theConsumer Price Index (CPI), their supply-demand balance would result ininflationary stability.
Another favourable factor is Vietnam’s inflation-focused monetarypolicies, which had proved to be highly effective against volatile prices.
“All factors considered, I think the inflation target of 4% is plausible. Iestimate annual CPI growth at around 3.3 to 3.9% this year,” he said.
Le Quoc Phuong, former deputy director of the Commercial and IndustrialInformation Centre under the Ministry of Industry and Trade, asserted that theworld's economy would definitely slide into recession in 2022.
He has two scenarios for Vietnam’s economy in the short term amid the global downturn.
Under the first scenario, the recession will come with fallingcommodity prices worldwide. Lower global prices, coupled with an abundantdomestic food supply, will give the country much room for inflationcontrol. The target of 4% is within reach.
Under the second scenario, global prices will continue to increase steadily,resulting in FED's benchmark hikes. The restrictive stance on interest rateswill weigh on exchange rates, causing a pass-through effect on domesticprices. The target of 4% will be less likely.
The former deputy director suggested the coordination of flexible monetarypolicies and fiscal policies and more tax cuts on fuels tocurb inflation in case the second scenario unfolds.
Ngo Tri Long, former head of the Ministry of Finance (MoF)'s Price ResearchInstitute, underscored three major factors behind inflationary pressures inViệt Nam in the second half of 2022.
First, Vietnamese economy has high trade openness and is largely dependent onimported materials. Mounting material prices in the world thus would translateinto domestic prices.
Second, rising fuel prices, undoubtedly, would add to production bills, liftinginflation.
Third, the stimulus package of 350 trillion VND takes root,causing a big shift in aggregate demand. High demand will cause upwardpressure on price levels.
He forecast that domestic inflation would overshoot the target by around 0.5%by year-end.
Nguyen Xuan Dinh, deputy head of the MoF's General Policy Office, remarked thatsoaring prices had become the order of the day in many countries. Notably,inflation hit 8.6% in the US, whereas the figure was 9% in the EU.
Meanwhile, core inflation was kept at just 1.25% in Vietnam in the first sixmonths of 2022.
Amid inflationary pressures from overseas, he called for active and flexiblemonetary policy to keep inflation in check for the rest of the year.
He urged the authorities to come up with a sufficient supply of essentialcommodities to avoid shortages, ensuring price stability.
Finally, he suggested the use of price-stabilising funds and tax cuts to easedomestic fuel prices, a large contributor to rising inflation.
Nguyen Manh Hung, chairman of the Vietnam Consumers Protection Association, wasconcerned that the CPI growth of 2.44% in the first half of 2022 was too goodto be true.
"We've found a discrepancy between the actual price growth and thereported figure of 2.44%. Food prices rose in many localities but the reportsaid the opposite," he said.
The chairman was relatively uncertain about future, saying that theRussia-Ukraine conflict would continue leading to price fluctuations./.
VNA
