VCN - Talking to Customs Newspaper, Assoc.Prof. Dr. Nguyen Ba Minh (photo), Director of the Institute of Economics and Finance, said from now until the end of the year, inflation pressure is still high but the target of less than 4% CPI is feasible.
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The GDP of the first six months in Vietnam was estimated to increase by 1.81% compared to the same period in 2019. Although it is the lowest increase of six months in the years 2011-2020, this is a bright spot amid the negative status of many countries. Do you have any comments about this?
- In the context of the complicated developments of the Covid-19 pandemic, seriously affecting all socio-economic fields, the entire political system, the Government and the Prime Minister put the first priority on pandemic prevention and suppression and sacrificing economic benefits to ensure people's lives and health. This is a solid foundation for our country's economy not to fall into negative growth like many countries in the world.
More specifically, social investment capital in the first six months of 2020 at current prices was estimated at VND 850.3 trillion, up 3.4% over the same period last year and equal to 33% of GDP. This is a positive signal reflecting the results of the Government's implementation of measures to promote the disbursement of public investment. Besides the subjective and objective reasons, the impact of the pandemic, the general situation of the world together with the Government's economic support packages, the participation of agencies at all levels and sectors, the average CPI of Vietnam in 2020 is expected to increase by 3.5 - 4% compared to 2019.
According to data from the General Statistics Office, the average CPI of the first six months increased by 4.19% over the same period in 2019, the highest increase in the past six years and showing the difficulty of efforts to curb inflation throughout the year at below 4.What are the challenges that will impact inflation control in the last six months of the year?
- Regarding inflation from now until the end of the year, there are two main factors that can push the CPI up. The first is that the prices of many types of raw materials and fuels on the world market will increase when the Covid-19 pandemic in the world is gradually controlled and production, trade and international exchange activities are restored. Secondly, in Vietnam, the situation of natural disasters and epidemics is still very complex, especially African swine fever, drought, saltwater intrusion, hot weather and extreme floods, that will greatly affect agricultural production activities, supply and demand of goods in the market and people's daily lives.
The challenges for controlling CPI are remarkable. However, are there any positive factors that will affect this task?
- Besides negative factors, there will also be positive factors to control the CPI in the last six months. They are the situation of the Covid-19 pandemic, trade wars, political conflicts in the world are still unstable and unpredictable, causing global economic growth to not be able to recover immediately and make the prices of material and fuel on the world market struggle to increase as expected.
In addition, supply and demand of pork in Vietnam in the last months of 2020 will reduce stress as pork prices will gradually cool down and will not be as high as the end of 2019 because businesses have been actively breeding and have reached goods results.
Another positive factor is that Vietnam’s political system has always proactively taken measures to prevent and control diseases, stabilise market prices, and manage monetary policy and pursued the goal of maintaining macro stability and controlling inflation.
For example, at the meeting of Steering Committee on Price Management on July 1, the Prime Minister assigned the Ministry of Industry and Trade to quickly develop content to amend Decree 83/2014 / ND-CP on petrol and oil trading, and notes to flexibly use the Price Stabilisation Fund to avoid big fluctuations in petrol and oil prices, while ensuring a balance of domestic supply and import of petrol and oil for appropriate reserves to meet consumer demand and strictly control fraud at retail units and smuggling of petrol and oil.
The Prime Minister also instructed not to increase electricity prices and cut clean water prices. He also asked the Ministry of Industry and Trade to well direct circulation, distribution, wholesale and retail to stabilise pork prices. Regarding the prices of education and health services, the Prime Minister requested the Ministries of Education and Training, Health and Finance research and report to the PM on adjusting the prices of these services appropriately, contributing to controlling inflation andsolving difficulties for poor households. The timely and consistent management and direction is essential and effective to help stabilise the CPI.
So far, the CPI in June increased 0.66% over the previous month. This is the highest increase from 2016 to the present. Inflation is under pressure. But if price and market management measures are carried out well, the goal of controlling inflation at increase of 4% is feasible.
Prime Minister Nguyen Xuan Phuc:
Pressure on price increase and inflation is still high, especially the price of crude oil and food tends to increase, and many countries have depreciated their currencies. In this context, it is determined to target of keeping inflation below 4%. We must be very flexible in administration, especially the time, the level of intervention, and policy tools so as not to affect the goal of economic recovery and development.
Controlling inflation but not tightening fiscal and monetary policies; Price control policies must contribute to stabilise, promote business development and stimulate growth.
For price management scenarios, the Ministry of Finance shall coordinate with the ministries and sectors to continue reviewing and updating the scenarios in line with set targets so that we can achieve the inflation rate below 4%. In case of extreme necessity, the inflation can be controlled at 4% to contribute to growth promotion.
The Ministry of Industry and Trade, competent agencies and all localities closely monitor market movements, prices, control price constituents and enhance anti-smuggling and anti-trade fraud; inspecting and examine the observance of law provisions on prices; strictly handle cases of speculative hoarding, raising prices, causing price fluctuations, monopolising prices illegally, in which controlling inputs and combating speculation to raise prices.
(Statements at the meeting of the Steering Committee on Price Management in July, 2020)
By Thuy Linh/ Huyen Trang