VietNamNet Bridge – The national economy has been growing well
and expected to prosper in 2013. However, this economic growth may lead to the
high inflation by the end of the year, according to the National Finance
Supervision Council.
The consumer price index CPI
increased slightly in August by 0.63 percent after the two consecutive months
of minus decreases. The National Finance Supervision Council, in a report to
the government, has warned that this would be a tendency in the fourth quarter
of the year.
In principle, CPI increases in
the last months of the year, when businesses gear up for the year end
production season, while the goods purchasing power increases in the months
before Tet. The total demand would increase as the result of the fiscal and
monetary policies, thus triggering the inflation.
Meanwhile, the increases of the
prices of some essential products would activate as the “push cost” factors,
leading to the CPI increase. The petroleum price increases, for example, would
lead to the price increases of all kinds of goods and services.
The finance supervision council
has estimated that if the average inflation rate in the four last months of the
year exceeds one percent, the inflation rate would be high at two-digit level,
which would have negative impacts on the macroeconomic stability in 2013.
Especially, the problem may become serious when it occurs in January and
February 2013, the price increase season.
Therefore, the government needs
to maintain the CPI increases at 0.5-0.8 percent a month in the last four
months of the year. If so, the inflation rate of the whole year could be curbed
at six percent.
The council has emphasized that
if the inflation cannot be controlled, this would cause the “inflation
expectation effect.” Especially, people can foresee the factors that support
the price increases in the first half of 2013, such as the planned electricity
and water price increases, the basic wage adjustments. The world’s oil and
petrol prices may also increase due to the uncertainties in some areas of the
world, which would lead to the petroleum price increases in Vietnam.
In conclusion, the economists
believe that the targeted inflation rate limitation should be set at six
percent in 2013.
Vietnam to see a more prosperous growth in 2013
Though giving warnings about the
possible high inflation rate, the finance supervision council keeps optimistic
about the economic growth in the next year.
The statistics show the stable
improvement in the economic growth in the last eight months with the growth
rate increasing quarterly. Especially, the third quarter witnessed a robust
growth, which gives a momentum for the stronger development in the time to
come.
According to the Ministry of
Planning and Investment, the GDP growth rate was four percent in the first
quarter, 4.66 percent in the second and 5.5 percent in the third.
The recovery has been attributed
to the improvement in the production. The inventory index remains relatively
high, but reports all have shown the rapid decreases since March.
Meanwhile, the dong/dollar
exchange rate remains stabilized, while the bank loan interest rates have
decreased sharply, making it easier for businesses to access official credit
sources. The 1.4 percent credit growth rate has been reported for August, after
seven consecutive months of minus growth rate.
All these factors can support the
economic recovery, giving more reasons to the finance supervision council to
predict that the GDP growth rate may reach 5.3-5.6 percent this year.
Pham Huyen
Business & Investment Opportunities
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