Topic: inflation

Dialogue aimed at acknowledging the challenges facing enterprises and workers and seeking solutions to help overcome the difficulties in economic recovery.

Core inflation up from 4.5 per cent in October to 4.8 per cent in November.

After the State Bank of Vietnam (SBV) raised the ceiling interest rate for deposits under six months to 6 per cent per annum, many banks increased their rates from October 25. The highest is at SCB, at up to 9.3 per cent per annum. Analysts have forecast that interest rates will continue to increase over the closing months of the year due to exchange rate pressure and inflation.

The State Bank of Vietnam (SBV) believes that inflationary pressure is tending to increase. The 2022 figure is expected to exceed 4 per cent, posing challenges in control efforts next year. Cutting lending interest rates will also face difficulties, due to deposit rates and the USD/VND exchange rate both tending to increase.

The heat of inflation does not appear to be too significant in Vietnam, with the World Bank (WB) forecasting a rate of around 3.8 per cent for this year. However, factors such as fluctuations in energy prices, the end of policies supporting lower taxes, rising prices for public services, and higher wages will make controlling inflation more difficult.

Mr. Hiroshi Funaki, Chairman of Vietnam Holding Limited, said that despite the gloomy prospects for the global economy, Vietnam is considered an attractive investment destination with positive growth prospects. Several banks have recently raised their 2022 growth forecasts to nearly 7 per cent. Inflation, meanwhile, is predicted to reach 3.5-4.0 per cent for the year.

A survey conducted by the General Statistics Office (GSO) shows that many enterprises believe that production and business as well as orders will increase by the end of the year, even if global inflation increases. Notably, the non-State sector was the most optimistic, with 83.6 per cent of respondents anticipating better production and business conditions in the fourth quarter. The rate among foreign enterprises was 80.9 per cent.

Analysts at the Vietnam Socio-Economic Forum 2022 on September 17 said that although the country’s eight-month CPI is relatively low, fluctuations have been significant and inflationary pressure and risks are increasing. Vietnam’s M2 money supply growth and M2 / GDP ratio are quite high compared to other countries in the region.

Prime Minister Pham Minh Chinh has signed Directive No. 15/CT-TTg on key tasks and solutions to maintain macro-economic stability, control inflation, promote growth, and ensure major balances in the economy in the new circumstances. The Directive assigns specific tasks to each ministry, branch, and locality, in which the State Bank of Vietnam (SBV) must manage monetary policy in a proactive and flexible manner, both to control inflation and to support economic recovery and growth.

Many exporters are facing difficulties from a decline in orders, resulting in workers being laid off or having their incomes cut. Some have said they are seeking measures to diversify markets, promote digital transformation, and innovate technology. In the closing months of this year, exporters will experience problems from rising non-tariff trade protection barriers in many major markets, unpredictable movements in global commodity prices, and risks from inflation and finance and monetary issues.