VINACHEM

HSBC Bank has projected the world oil price would rise to around US$60 per barrel this year owing to increasing demand, thus piling pressure on Vietnam’s inflation.

Pham Hong Hai, chief executive officer of HSBC Vietnam, told the Daily on the sidelines of a seminar in HCMC on March 24 on Vietnam’s economic prospects that demand has been on the rise, driven by a recovery of the manufacturing sector. However, supply has not gone up correspondingly as many oil firms have put on hold their expansion plans over the past few years due to the world oil price plunge.

This is one of the factors that help drive up the world oil price to around US$60 per barrel this year, higher than the average of over US$50 per barrel in the past time.

The higher oil price will be factored into Vietnam’s consumer price index (CPI) in 2017. Inflation will also be under more pressure because of higher prices of healthcare and educational services and a possible pickup in power tariffs this year.

“Those are the reasons behind our projection that Vietnam’s CPI would increase 4.5% this year compared to last year, well above the 4% target of the Government,” Hai said. In his presentation at the seminar, Hai said the country’s gross domestic product (GDP) growth is estimated at 6.4% this year and that the 6.7% target by the Government is deemed high given a host of challenges. The exchange rate between the U.S. dollar and Vietnam dong is predicted to reach VND23,200 at the end of this year.

Banks are expected to keep interest rates stable in the first six months before gradually adjusting them up by 0.5-1 percentage point in the second half of this year.

Hai said HSBC had however projected Vietnam would obtain good GDP growth in the next 3-5 years. “Medium and long-term growth will depend much on reforms,” Hai said. - SGT