June 01, 2020 22:16

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Whether reduction of pig and gasoline prices has positively impacted economic growth or not

20:03 | 03/04/2020

VCN- Gasoline prices have dropped to the lowest level in the last 10 years. Large pig producers have also committed to reduce the price of live pigs to VND 70,000 / kg from April 1. These moves are expected to help the consumer price index (CPI) and gradually positively impact the growth of the economy.

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It is predicted that falling petrol and pig prices will immediately aid the CPI. Photo: Nguyen Thanh

Great profit business

Receiving information about a sharp drop in gasoline prices, Nguyen Tuong, Deputy General Secretary of Vietnam Logistics Association, could not hide his joy of sharing that the sharp drop in gasoline price was very exciting. Falling petrol prices and reduced BOT fees are not only beneficial to logistics enterprises, but also benefit import-export enterprisesby improving their competitiveness.

In Vietnam's logistics costs, transportation costs account for about 60 %. Currently, domestic road transport accounts for more than a 75 % market share. Reducing transport costs plays an important role in reducing logistics costs.

Although transport activities are affected by the Covid-19 pandemic, the decrease in petrol price still has a positive impact, helping businesses reduce some difficulties when revenue declines.

“For example, cars used to do 100 trips per day but now they have 50 buses a day, businesses still have to buy gasoline to run. Gasoline prices fell sharply, even though running 50 trips is also benefiting," Tuong said.

In addition to the sharp drop in gasoline prices, another good news in terms of price is at the meeting with large livestock enterprises organised by MARD on the morning of March 30 in Hanoi, under the chairmanship of Deputy Prime Minister, Trinh Dinh Dung, 15/15 large livestock enterprises have committed to adjust the price of live pigs to VND 70,000 / kg from April 1.

The Minister of Agriculture and Rural Development Nguyen Xuan Cuong assessed and adjusted the price of live hogs to VND 70,000 / kg, contributing to the dual goal of protecting the domestic pork market, sharing benefits with consumers and at the same time to ensure a stable CPI.

Positive control of CPI

Talking to reporters of the Customs Newspaper, Nguyen Duc Do, Deputy Director of the Institute of Financial Economics (Academy of Finance), said the reduction in gasoline and pork prices is good news, positively impacting on the factor of controlling inflation in the future.

“CPI in the first quarter was 5.56 %. CPI in the second quarter is probably more than 4 %. For the whole year, the opportunity to control CPI below 4 % is still likely to be achieved, but it cannot be confirmed with absolute certainty,” Do said.

Regarding the pig price story, speaking at a recent press conference announcing the first quarter of 2020 socio-economic statistics of the General Statistics Office (Ministry of Planning and Investment), General Director of the General Department Statistics Nguyen Bich Lam said the Government called for the price of pigs to be lowered to less than VND 60,000 / kg.

Reducing the live hog price helps control the CPI well after suppressing African swine fever, promoting re-herd is an important solution to provide food for people and control inflation.

It is expected that after reducing the price to VND 70,000 / kg of live pigs from April 1, the price of pigs will gradually fall to VND 60,000 / kg by the end of the second quarter and the beginning of the third quarter. Commenting on the move to cut the price of live hogs of large enterprises is good information, Nguyen Duc Do said, "If the price of live hog is immediately reduced to VND 60,000 / kg in April. In the future, controlling CPI below 4 % this year will be much more confident”.

Answering a question of the Customs Newspaper reporter on how the reduction in petrol and pig prices has a positive impact on economic growth in general, Do said that although the petrol price decreased, in the immediate future, this will only have a partial supportive effect, with not much impact on economic growth. That's because many industries are experiencing production disruptions due to the Covid-19 pandemic.

However, when the pandemic ends, cheap gasoline prices will be an advantage. However, Do also noted, the current gasoline price can be said to have reached the "dramatic" level, when the price has passed completely, the petrol price may be in an upward trend.

By Thanh Nguyen/Bui Diep