Vietnam unlikely to meet inflation target in 2022: economists

To Trung Thanh of the team from the National Economics University attributed the rise in prices, especially of gasoline, to Russia’s attack on Ukraine.

Besides, Vietnam’s money supply as a ratio of GDP has been comparatively high among Southeast Asian countries and is likely to be inflationary, he said.

As a result, the team does not expect inflation this year to be contained at 4 percent or less, the target set last October by the government.

Gasoline prices have soared by 45 percent since, resulting in a 0.6 percentage point rise in the consumer price index used for calculating inflation.

Other financial institutions also warn of rising inflationary pressure, with Standard Chartered too expecting consumer prices to rise by more 4 percent in 2022 and even to 5.5 percent in 2023.

Data from the General Statistics Office shows the CPI rose by 1.92 percent in the first quarter against 0.29 percent last year.

But the agency said inflation is under control.

Thanh said growth should be the priority and in the short term the government should seek to stimulate aggregate demand to boost recovery.

In the longer term the group recommended counter-cyclical fiscal policies, close monitoring of public spending, diverting credit flows to the manufacturing sector, and cracking down on speculative markets to mitigate the risk of inflation.