Experts think differently about the fear of inflation

“Congestion of public investment capital, slow capital injection for businesses for fear of inflation is a waste of opportunity. If the situation is not normal, the thinking must be different,” said Mr. Tran Dinh Thien at the Vietnam Economic Forum. South 2022 afternoon 5/6.

This comment was made by former Director of the Vietnam Institute of Economics in the context that Vietnam’s post-epidemic economic recovery efforts are facing many challenges due to increasing inflationary pressure. He said that Vietnam has a good foundation, the economy is gaining momentum, possibly, has aspirations, creating opportunities for breakthroughs, so “this opportunity must not be wasted”.

If money is not pumped into the economy, according to Mr. Thien, inflation will still increase because it is outside the will of the management agency, so the money injection still has to be done.

“In inflationary conditions, businesses may be ‘anemic’, lacking strength will be at risk. We can actively prepare for an inflation rate higher than 4% to pump resources into the economy, kind of ‘using poison to treat poison'”, Mr. Thien assessed.

According to the General Statistics Office, on average in the first 5 months of this year, the consumer price index (CPI) increased by 2.25% over the same period in 2021, higher than the increase of 1.29% in the first 5 months of 2021. In May alone, monthly CPI increased by 0.38%.

Among 11 main groups of consumer goods and services, 10 groups of goods increased in price compared to April. The main reason was the increase in domestic petrol and oil prices in line with world prices; The price of food, foodstuffs, and the prices of essential consumer goods and services increase with the price of raw materials and input materials.

In May, HSBC’s monthly report forecast that domestic demand will continue to recover and world commodity prices tend to continue to increase, so Vietnam’s inflation will increase to 3.7% in 2022.

“Price pressure is likely to remain below the 4% inflation ceiling of the State Bank,” the bank said.

According to Mr. Thien, there is a paradox in the flow of public and private capital. The paradox is that public investment capital is disbursed for many years while private capital is very flexible and has high explosive potential. Because private capital has exploded in recent times, sometimes management takes actions that seem to contain it. “But preventing private capital to lose the opportunity for economic recovery is problematic,” he assessed.

Meanwhile, Mr. Vu Thanh Tu Anh, Director of the School of Public Policy and Management, Fulbright University I think that inflation is not a concern in Vietnam at the moment, but the future is worrisome.

In the global context, the Ukraine conflict creates a lot of instability. The two economies of Russia and Ukraine have small trade, investment and financial relations with Vietnam, so the direct impact is not much. However, indirect impacts on fuel and food prices and supply chain disruptions are noticeable.

Along with that, inflation in Europe and the US is currently above 8%, which is a very high level for developed countries. Vietnam currently does not have high inflation because of the lag in import inflation, low GDP growth and because it is an exporter of food and food while the price of this item is escalating.

Meanwhile, Vietnam’s credit growth rate is not low, by the end of May, it has doubled over the same period.

“Therefore, monetary policy in my opinion needs to be cautious, it is not possible to expand credit because it is not a good consequence,” the expert assessed.

Mr. Vu Thanh Tu Anh ranked inflation as one of 3 pressures on the economy at the moment, besides bad debt and external factors (such as epidemics, war, world inflation, trend of monetary tightening). . “All these external factors are going in the same direction of slowing global growth. We are highly dependent on the external economy so any downturn affects Vietnam,” he said.

International experts recommend that Vietnam continue to monitor the impact of world inflation. Mr. Andrew Jeffries, country director of the Asian Development Bank (ADB) in Vietnam, said that the loosening monetary policy in Europe and the US could affect interest rates, contributing to higher fuel prices. Along with that, the Ukraine conflict contributed to increasing inflationary pressure and pressure on central banks, including Vietnam.

Meanwhile, IMF Representative in Vietnam Francois Painchaud, said that Vietnam has not completely overcome the difficulties but still has challenges such as the Ukraine conflict, the anti-epidemic situation in China, inflation and concerns in the country. on the real estate market and corporate bonds.

“In this context, intervention policies are very important, but need to be flexible. Currently, we do not have the ability to loosen monetary policy. Therefore, it is advisable to strengthen the banking sector more strongly by increasing the requirements. reserves, assessment and disposal of assets to be tracked,” he recommended.

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