VINACHEM

Vietnam’s economic conditions continued to improve, with both industrial production and retail sales registered a third month of growth, said World Bank (WB) in the December edition of its Vietnam Macro Monitoring.

Merchandise exports hit a record high of 31.9 billion USD, helping maintain a second consecutive month of trade surplus while FDI commitment recovered after a brief dip in October. The number of newly established formal firms increased by 45 percent month-on-month in November, a second month of increase since May. Firm exit numbers also increased, but at a slower pace than firm entry.

Inflation ticked up due to fuel price hikes, recovering non-food domestic demand and rising logistic costs while credit growth remained stable, providing amble liquidity to support the economy recovery. After two months of decrease, the Consumer Price Index (CPI) increased by 0.3 percent month-on-month in November.

The government continued its contractionary fiscal stance as the budget balance posted another month of surplus, driven by strong revenue collection, the report noted.

Given the available fiscal space, and difficulties registered in implementing the budget in 2021, another policy option for consideration is a reduction in the value-added taxes for 2022 to support private consumption. - VNN-