inflation-rate-to-remain-stable-but-credit-growth-to-slow-economist

Vietnam: Inflation rate to remain stable but credit growth to slow: economist

As demand is weak, the goal of curbing the inflation rate at below 4 percent is reachable. The concern now is that people do not want to borrow capital, according to Can Van Luc from BIDV.

The General Statistics Office (GSO) reports that the CPI increased by 0.66 percent in June compared with May, the sharpest increase compared with the same periods in 2016-2020. The average CPI in the first half of the year i’rose by 4.19 percent compared with H1 2019.

Nguyen Ba Minh, director of the Institute of Economics and Finance, cited many factors that helped curb CPI increases in the first half of the year.

The prices of essential goods, including petroleum products, decreased by 19.49 percent compared with the same period last year. As the pandemic affected the tourism industry, the prices of package tours decreased by 1.49 percent.

Asked about the CPI in the second half, Minh said there are two factors which may make the CPI increase. The prices of materials and fuels may bounce back once the pandemic is contained and international production and trade activities return to normal.

The prices of essential goods, including petroleum products, decreased by 19.49 percent compared with the same period last year. As the pandemic affected the tourism industry, the prices of package tours decreased by 1.49 percent.

Meanwhile, natural calamities, including drought, saline intrusion and extreme floods, and pandemics, and ASF (African swine fever) will have a big impact on agricultural production and goods supply and demand.

However, he also sees several factors that will curb the CPI increase in the last months of the year. Because of Covid-19, US-China trade war and political conflicts, the global economy cannot recover this year, which means that the prices of materials and fuels in the world may not increase as expected.

Nguyen Duc Do, a respected economist, believes that pressure on inflation in the last months of the year won’t be high because the global economy will not be able to fully recover in the second half of the year and the crude oil price will not rise sharply.

The inflation rate in 2020 will be 3.5 percent (+/- 0.5 percent), according to Minh.

Ngo Tri Long, a price expert, commented that it would be more difficult to manage the goods and service prices this year because the world is in unprecedented health crisis.

However, he agreed with Minh that though pressure on inflation exists, the goal of curbing the inflation rate at 4 percent is within reach.

Meanwhile, Luc believes that there is no need to worry about inflation. He said the biggest worry for now is the low credit growth rate.

He cited SBV’s report as showing that credit grew by 2.45 percent in the first half of 2020, much lower than the 7.33 percent rate in the first half of 2019.

Kim Chi 

Source: https://vietnamnet.vn/en/business/inflation-rate-to-remain-stable-but-credit-growth-to-slow-economist-656212.html