VINACHEM

HANOI – The Government has estimated the consumer price index (CPI) would rise by 1.5-2.5% this year, much lower than the projected 5%.

According to the Government’s report on the January-September socio-economic performance and 2016 forecasts presented to the National Assembly Standing Committee on October 12, the CPI picked up 0.4% last month against December 2014, and rose by 0.74% year-on-year in the first nine months.

Despite such a low rise, the Government said there were no signs of deflation as domestic sales and aggregate demand improved considerably in the period. Total retail sales of goods and services, with the price factor excluded, increased 9.1%, higher than the figure in previous many years.

However, this year’s CPI is estimated to inch up by 1.5-2.5%, with the highest possible increase just half of the projection.

Last year the NA’s resolution capped inflation at 7% but the actual rate was a mere 1.84%.

According to the NA’s Economic Committee, such differentials were seen positive and helped contribute to marco-economic stability and boost trust in the Vietnamese currency.

Nevertheless, tightened monetary and fiscal policies have dealt a blow to enterprises and consumption, which is evident in the high number of suspended and dissolved enterprises.

Around 60,000 enterprises suspended operations and went bust in 2013, 67,800 in 2014 and 54,566 in the first nine months of this year. This will cause negative medium and long-term impact on the economy.

According to the Government, this year’s GDP will be higher than the target by 0.3 percentage point (6.5% compared to the target of 6.2%). In addition, export growth will be around 10% this year while the ratio of trade deficit to exports will be equivalent to or lower than the forecast (3.6% compared to 5%).

However, crude oil pumping surpassed the target by 1.2 million tons. Besides, the agro-aqua-forestry sector picked up only 2.08% in the nine-month period while the increase of last year’s same period was 3%.

Other worrying signs are a recurrence of trade deficit after a three-year period that ended last year, the lingering trade deficit of domestic enterprises and the trade surplus of the foreign direct investment (FDI) sector.