Inflation to increase sharply towards the year end
VietNamNet Bridge –The national economy has been growing well and expectedto prosper in 2013. However, this economic growth may lead to the high inflationby the end of the year, according to the National Finance Supervision Council.
The consumer price index CPI increased slightly in August by 0.63 percent afterthe two consecutive months of minus decreases. The National Finance SupervisionCouncil, in a report to the government, has warned that this would be a tendencyin the fourth quarter of the year.
In principle, CPI increases in the last months of the year, when businesses gearup for the year end production season, while the goods purchasing powerincreases in the months before Tet. The total demand would increase as theresult of the fiscal and monetary policies, thus triggering the inflation.
Meanwhile, the increases of the prices of some essential products would activateas the “push cost” factors, leading to the CPI increase. The petroleum priceincreases, for example, would lead to the price increases of all kinds of goodsand services.
The finance supervision council has estimated that if the average inflation ratein the four last months of the year exceeds one percent, the inflation ratewould be high at two-digit level, which would have negative impacts on themacroeconomic stability in 2013. Especially, the problem may become serious whenit occurs in January and February 2013, the price increase season.
Therefore, the government needs to maintain the CPI increases at 0.5-0.8 percenta month in the last four months of the year. If so, the inflation rate of thewhole year could be curbed at six percent.
The council has emphasized that if the inflation cannot be controlled, thiswould cause the “inflation expectation effect.” Especially, people can foreseethe factors that support the price increases in the first half of 2013, such asthe planned electricity and water price increases, the basic wage adjustments.The world’s oil and petrol prices may also increase due to the uncertainties insome areas of the world, which would lead to the petroleum price increases inVietnam.
In conclusion, the economists believe that the targeted inflation ratelimitation should be set at six percent in 2013.
Vietnam to see a more prosperous growth in 2013
Though giving warnings about the possible high inflation rate, the financesupervision council keeps optimistic about the economic growth in the next year.
The statistics show the stable improvement in the economic growth in the lasteight months with the growth rate increasing quarterly. Especially, the thirdquarter witnessed a robust growth, which gives a momentum for the strongerdevelopment in the time to come.
According to the Ministry of Planning and Investment, the GDP growth rate wasfour percent in the first quarter, 4.66 percent in the second and 5.5 percent inthe third.
The recovery has been attributed to the improvement in the production. Theinventory index remains relatively high, but reports all have shown the rapiddecreases since March.
Meanwhile, the dong/dollar exchange rate remains stabilized, while the bank loaninterest rates have decreased sharply, making it easier for businesses to accessofficial credit sources. The 1.4 percent credit growth rate has been reportedfor August, after seven consecutive months of minus growth rate.
All these factors can support the economic recovery, giving more reasons to thefinance supervision council to predict that the GDP growth rate may reach5.3-5.6 percent this year.
In principle, CPI increases in the last months of the year, when businesses gearup for the year end production season, while the goods purchasing powerincreases in the months before Tet. The total demand would increase as theresult of the fiscal and monetary policies, thus triggering the inflation.
Meanwhile, the increases of the prices of some essential products would activateas the “push cost” factors, leading to the CPI increase. The petroleum priceincreases, for example, would lead to the price increases of all kinds of goodsand services.
The finance supervision council has estimated that if the average inflation ratein the four last months of the year exceeds one percent, the inflation ratewould be high at two-digit level, which would have negative impacts on themacroeconomic stability in 2013. Especially, the problem may become serious whenit occurs in January and February 2013, the price increase season.
Therefore, the government needs to maintain the CPI increases at 0.5-0.8 percenta month in the last four months of the year. If so, the inflation rate of thewhole year could be curbed at six percent.
The council has emphasized that if the inflation cannot be controlled, thiswould cause the “inflation expectation effect.” Especially, people can foreseethe factors that support the price increases in the first half of 2013, such asthe planned electricity and water price increases, the basic wage adjustments.The world’s oil and petrol prices may also increase due to the uncertainties insome areas of the world, which would lead to the petroleum price increases inVietnam.
In conclusion, the economists believe that the targeted inflation ratelimitation should be set at six percent in 2013.
Vietnam to see a more prosperous growth in 2013
Though giving warnings about the possible high inflation rate, the financesupervision council keeps optimistic about the economic growth in the next year.
The statistics show the stable improvement in the economic growth in the lasteight months with the growth rate increasing quarterly. Especially, the thirdquarter witnessed a robust growth, which gives a momentum for the strongerdevelopment in the time to come.
According to the Ministry of Planning and Investment, the GDP growth rate wasfour percent in the first quarter, 4.66 percent in the second and 5.5 percent inthe third.
The recovery has been attributed to the improvement in the production. Theinventory index remains relatively high, but reports all have shown the rapiddecreases since March.
Meanwhile, the dong/dollar exchange rate remains stabilized, while the bank loaninterest rates have decreased sharply, making it easier for businesses to accessofficial credit sources. The 1.4 percent credit growth rate has been reportedfor August, after seven consecutive months of minus growth rate.
All these factors can support the economic recovery, giving more reasons to thefinance supervision council to predict that the GDP growth rate may reach5.3-5.6 percent this year.