VCN - Although the world economic situation has many unpredictable developments, but with the internal strength of the national economy, together with solutions to control inflation, in 2019, Vietnam can fully achieve the goal of controlling inflation below 4%.
|Petrol price cut, could have "given a sigh of relief" with inflation?|
|Preventing “taking advantage” when petrol price increases|
|More concerns about inflation control in 2018|
|Lower inflation rate in the first month of 2019 than the same period last year will positively affect the inflation in the same period of all months of the year, as well as the average inflation in 2019. Photo: Nguyen Hien.|
This assessment was approved by many experts at the seminar: "developments of market and prices in Vietnam in 2018 and forecasts for 2019", taking place on the morning of January 3, 2019 in Hanoi.
Annual average consumer price index (CPI) in 2018 rose by 3.45%
Mr. Nguyen Ba Minh, Director of the Institute of Economics and Finance - Academy of Finance, remarked that the world economy in 2018 took place with a slowdown in growth compared to 2017 and had unstable and unpredictable factors. Although the Vietnamese economy in 2018 benefited from positive development results in 2017, it also faced many difficulties such as high import tax on some of Vietnam's main products to the US; low disbursement of public investment, etc.
According to the General Statistics Office, GDP in 2018 increased by 7.08% compared to 2017, which is the highest increase in the 2011 – 2018 period. In the overall economic growth, the agriculture, forestry and fishery sector increased by 3.76% (contributing 8.7% to the overall growth rate), the industry and construction sector increased by 8.85% (contributing up to 48.6%); the service sector increased 7.03% (contributing 42.7%).
According to Mr. Minh, the GDP growth rate in 2018 was noticeable with the highest growth rate of the agriculture, forestry and fishery sector in the 2012-2018 period, confirming the efficiency of the sector restructuring trend. On the other hand, stable product selling prices and expanded export markets were the main driving forces for this sector’s development. The manufacturing and processing industry continued to be a bright spot and a driving force with a growth rate of 12.98%.
The average CPI in 2018 increased 3.45% compared to the average rate in 2017, lower than the target set by the National Assembly of about 4%. Evaluating the inflation control in the past year, economist Assoc. Prof. Dr. Ngo Tri Long said that core inflation (CPI after excluding food, fresh food, energy and commodities managed by the State including health and education services) in 2018 rose by 1.48% compared to 2017. Thus, the 2018 assigned target of controlling inflation and keeping the average CPI in 2018 below 4% has been achieved in the context of adjusting most of the prices of commodities managed by the State.
“In 2018, general inflation has a higher growth rate than the core inflation, which reflects price fluctuations mainly from the increase in prices of food, foodstuffs, petroleum and price control factors through upward revision of health and education service prices,” Assoc. Ngo Tri Long analyzed.
Also according to Long, in 2018, the exchange rate was under pressure mainly from a series of disadvantages from the international market such as from the dollar appreciation in the international market in anticipation of the FED's interest rate hike. The complicated global trade tension, the strong devaluation of Japanese Yen and some currencies of newly emerging countries had a great impact on market sentiment. However, by the end of 2018, the exchange rate of Vietnam still maintained a stable trend, fluctuating in a range of 3%.
Many factors affect 2019 inflation
Regarding 2019 inflation, according to PhD. Nguyen Duc Do, Institute of Economics and Finance, Academy of Finance, in fact, inflation control in 2019 is due to oil prices plunging in the past 2 months, from above US$ 70 / barrel to less than US$ 50/ barrel. With the sharp decrease in oil prices, the inflation in December 2018 was only 2.98%, down sharply from 3.89% in the same period last year, down sharply from 3.98% in October 2018.
PhD. Nguyen Duc Do said that this was a very favorable condition to control inflation below 4% in 2019. Because the starting rate of inflation in the first month in 2019 was likely to be below 3% after the Ministry of Industry and Trade and Ministry of Finance decided to revise down petroleum price by about 500 VND / liter. Low inflation rate compared to the same period of the first month of 2019 will have a positive impact on inflation in the same period of all months of the year, as well as the average inflation of 2019.
According to Mr. Do, in addition to decreasing oil prices, there are many other factors controlling the inflation such as: the pork price in 2019 is likely to not increase; the pressure on the exchange rate in 2019 is forecasted to be lower than in 2018, because the US economy is expected to grow slowly and the US Federal Reserve System (FED) 's rate hike is also in the final stage, leading to the demand for the US$ not to increase as much as before. Another positive factor is that US-China tensions are tending to cool down.
Assessing the disadvantages for inflation control in 2019, PhD. Le Quoc Phuong, Industry and Trade Information Center, Ministry of Industry and Trade said that the world commodity prices in 2019 are forecasted to rise and FED plans to raise interest rates at least twice in 2019. After that, the US$ will raise prices, putting pressure on the exchange rate and on inflation.
In terms of domestic factors, the GDP growth target is relatively high, while the growth model has not yet renewed, which also causes pressure on inflation. Furthermore, some localities continue to raise prices of health and education services according to the roadmap; the electricity price has been maintained at a relatively low level for a long time and may increase, plus possible tax rates on petroleum rising to a higher level, both of these are fundamental factors causing inflation.
|CPI grows 3.57% in nine months, inflation target achievable: GSO
The average consumer price index CPI in the nine months of 2018 rose by 3 57 percent ...
However, according to this expert, Vietnam also has many advantages to curb inflation. Accordingly, CPI in recent years has been lower than 4%, core inflation in recent years has been below 2%; supply of goods has been relatively abundant and macro-economy has been stable, ...
Mr. Phuong said that with the above advantages, if the solutions are well implemented, the target of inflation control below 4% in 2019 will probably be realized.
By Thuy Linh/ Huyen Trang