Inflation management must be flexible and adaptive

VCN - In order to cope with the worsening situation of the pandemic and ensure GDP growth in the last months of the year, Dr. Nguyen Bich Lam, an economic expert and former Director of the General Statistics Office, said that it was necessary to maintain an expansionary fiscal and monetary policy in the short term.
Inflationary pressure still present: GSO official Inflationary pressure still present: GSO official
Continuing to manage prices, supporting the implementation of Continuing to manage prices, supporting the implementation of "dual goals"
Inflationary pressure still present: GSO official Inflationary pressure still present: GSO official
Dr. Nguyen Bich Lam, economist and former Director General of the General Statistics Office.
Dr. Nguyen Bich Lam, economist and former Director General of the General Statistics Office.

The pandemic is having a great effect on Vietnam's economy. How do you assess the factors affecting Vietnam's economic growth in the last months of the year?

Due to the large openness, the increase in global inflation in 2021 may affect the Vietnamese economy in increasing prices of goods and services for domestic consumption. Rising crude oil and food prices will increase production costs, transportation fees, and domestic feed and food prices; affect the balance of trade because the value of imports increased more than the value of exports because exports faced difficulties due to the pandemic; affecting public investment and construction investment in general due to the high price of raw materials causing interruption of construction activities.

Recently, the World Bank (WB) has forecasted the global economic outlook for 2021 and 2022 with a strong recovery of major economies. For emerging markets and developing economies, the World Bank has forecasted growth of 6% in 2021 due to increase of aggregate demand and commodity prices. However, the economic recovery of countries in this group (excluding China) would be delayed due to the Covid-19 pandemic and slow implementation of vaccinations.

In addition, the price increase of some items due to a supply shortage may be in the long run, such as a shortage of semiconductor chips for automobile production and electronic goods.

In your opinion, to achieve the goal of GDP growth in 2021, what will the Vietnamese economy need to do?

Bringing the economy back to the growth rate of the years before the pandemic, and implementing the socio-economic development orientation for the 2021-2025 period with an average GDP growth rate of 5 years about 6.5-7% requires us to implement flexible and expansionary fiscal and monetary policies, accepting inflation exceeding the National Assembly's target of 4%, but still within the inflation threshold.

It needs to be done in the context that countries around the world are trading off targeted inflation to boost growth and create jobs, and bring the economy back to the normalcy of the pre-pandemic period.

Accordingly, in order to recover and promote economic growth while controlling inflation, the Government needs to study and implement a number of solutions.

Firstly, it is necessary to speed up the process of vaccinations to achieve the rate of herd immunity as soon as possible, creating an important basis for returning the economy to normal, promoting economic activities, domestic and international production and tourism.

Secondly, continue implementing expansionary monetary and fiscal policies to promote growth. The complicated development of the pandemic caused aggregate demand to decline, the labour market has not recovered, and the economy has not taken advantage of its potential.

Meanwhile, the CPI remains at a low level. Therefore, in the short term, it is necessary to maintain an expansionary fiscal and monetary policy. At the same time, continue to strictly supervise and control cash flow into investment channels such as foreign currency, gold, real estate, to control risks affecting the macro economy, and promote resources and capital in production and business activities.

Thirdly, urgently develop and implement an economic recovery program, stimulate demand in the service and tourism sectors, and have specific solutions to support the recovery of production and business activities of enterprises and business households.

At the same time, promoting disbursement of public investment capital is associated with increasing capital efficiency. Accelerating the disbursement of public investment capital plays an important role in promoting growth, not only increasing aggregate demand but also improving the capacity and total supply of the economy, creating a favourable infrastructure for manufacturing enterprises.

Therefore, public investment must be effective, highly pervasive, create favourable conditions for production and business to promote the supply side of the economy in the long term.

You mention that we should reduce inflation pressure, in your opinion, what should we do?

In my opinion, it is necessary to study the suitable "inflation threshold" for each stage of economic development, in order to set a medium-term inflation target instead of an annual inflation target.

When the economy is in the recovery phase, policies to stimulate aggregate demand will boost production, business, and economic growth. Inflation may increase in the short term because aggregate demand increases, but there is a delay from the supply side because enterprises need time to grasp market demand and adjust production and business activities. Inflation will fall again as the economy's supply increases. Therefore, inflation management needs to be flexible and adaptable to each stage of the economy.

Besides, it is also necessary to actively prepare conditions to promote production and business, ensure the supply and circulation of goods, and reduce inflationary pressure. For short-term shortage of goods, it is necessary to study policies to cut production costs, import raw materials for production; at the same time, strengthen inspection and examination activities, resolutely handle if detecting acts of speculation, hoarding or manipulating prices, especially for commodities that have shown signs of decreasing prices on the international market.

For long-term shortages such as semiconductor chips, it is necessary to have preferential policies and investment incentives to promote the production of the above items, take the initiative in the source of raw materials, increase the independence and autonomy of the economy.

In addition, it is also necessary to closely monitor price movements and inflation around the world, promptly warn about risks affecting domestic prices and inflation. In particular, it is necessary to carefully evaluate and distinguish which items and materials are likely to be short-term temporarily or in the long-term so as to have appropriate policies to meet production and consumption demand. At the same time, effectively and flexibly implement the role of the State in regulating and stabilizing prices such as gasoline, health services, and education.

Studying the timing and level of price adjustment of petrol and services managed by the State to avoid resonance with cost-push inflation, creating expected inflation of the economy.

Effectively implement communication activities to promptly, accurately and clearly inform the Government's direction and management policies and solutions in order to eliminate false information about market prices and prevent psychological inflation caused by misinformation.

Thank you, Sir!

By Xuan Thao (recording)/ Binh Minh

Related News

Managing price effectively, reducing pressure on inflation

Managing price effectively, reducing pressure on inflation

VCN - Timely and effective price management helps control the consumer price index (CPI) and inflation in accordance with the set target.
Risks for the economy when cash flow has not yet been put in to production and business

Risks for the economy when cash flow has not yet been put in to production and business

VCN - Investment channels in Vietnam have a lot of potential, but financial and banking expert Dr. Nguyen Tri Hieu, Director of the Institute for Research and Development of Global Financial and Real Estate Markets, said that cash flow into production and business is still modest, leading to risks for the economy.
Vietnam to achieve credit rating as set target

Vietnam to achieve credit rating as set target

VCN - With the current credit rating scale, Vietnam is getting closer to the target of raising the investment rating grade by 2030 set out in the National Credit Rating Improvement Project by 2030.
Note for businesses when converting green and digital

Note for businesses when converting green and digital

VCN - Green transformation and digital transformation have been identified by businesses as a mandatory path if they want to develop long-term. However, there are many issues that businesses need to pay attention to right from the start of the transformation if they want to achieve efficiency.

Latest News

Linkage - the "key" to sustainable development of agricultural value chains

Linkage - the "key" to sustainable development of agricultural value chains

VCN - Promoting sustainable and effective development of agricultural value chains is a core factor in restructuring Vietnam's agricultural sector and the key to optimize the value of Vietnam's agricultural exports.
Supporting industry enterprises: Learning standards, understanding opportunities

Supporting industry enterprises: Learning standards, understanding opportunities

VCN - Currently, many potential industries have "opened" opportunities for Vietnamese enterprises to enter, such as the semiconductor industry, supporting industries for the aviation sector. However, the higher the added value of the sector, the more it requires enterprises to meet international standards.
Vietnam’s distinctive agricultural exports to China exhibited in Hanoi

Vietnam’s distinctive agricultural exports to China exhibited in Hanoi

An exhibition showcasing Vietnam’s distinctive farm produce exported to China opened in Hanoi on October 13, featuring the participation of 16 local enterprises and introducing over 50 categories of high-quality products from across the three regions of the country.
100 most valuable Vietnamese brands on the limelight

100 most valuable Vietnamese brands on the limelight

This year’s Brand Finance Vietnam 100 Report was also released to provide a comprehensive picture of the valuations.

More News

Need to quickly act to catch up with the "green" trend

Need to quickly act to catch up with the "green" trend

VCN - With the movement from the global level to Vietnam's main markets, as well as the strong commitment of the Vietnamese Government, the trend of "compulsory green/sustainable transformation" has become clear to Vietnamese businesses instead of voluntary as before. However, the level of readiness of businesses is not high.
Businesses cooperate to develop advanced technology

Businesses cooperate to develop advanced technology

VCN- In order to foster development of the high-tech sector, one of factors is close cooperation between businesses to improve competitiveness and promote innovation.
Export target for 2024 set at US$400 billion

Export target for 2024 set at US$400 billion

VCN - Since the beginning of the year, Vietnam's export activities have continued to recover. It is forecasted that the total export turnover for the entire year may reach a historic milestone of US$400 billion.
Thai Binh intensifies cooperation with Russian localities

Thai Binh intensifies cooperation with Russian localities

A delegation from the northern province of Thai Binh, led by Chairman of the provincial People’s Council Nguyen Tien Thanh, on October 10 met with representatives of the Moscow Chamber of Commerce and Industry, along with several Russian businesses.
Ho Chi Minh City partners with nine provinces to boost import and export activities

Ho Chi Minh City partners with nine provinces to boost import and export activities

VCN - Ho Chi Minh City (HCMC) and nine provinces in the northern and north-central regions are cooperating in socio-economic development, leveraging each region's advantages and potential to boost import and export activities.
Vietnam

Vietnam's second rice brand enters picky Japanese market

Japonica - AAN has become the second Vietnamese rice brand to have entered Japan, with a ceremony held on October 9 to debut the produce.
Enterprises need to be ready to respond to trade defense

Enterprises need to be ready to respond to trade defense

VCN - According to the Department of Trade Defense, through the process of protecting the rights of Vietnamese manufacturing and exporting enterprises in each trade defense case, the outcome of the appeal depends largely on the quality of coordination between the parties involved.
Foreign investors interested in green development, semiconductor industry in Vietnam

Foreign investors interested in green development, semiconductor industry in Vietnam

Green, clean development and semiconductor chip production are among the sectors in Vietnam that foreign investors are interested in, according to VinaCapital CEO and Founding Partner Don Lam.
Vietnam’s stainless steel exports under dual investigation

Vietnam’s stainless steel exports under dual investigation

The US Department of Commerce (DOC) has initiated an anti-dumping and countervailing duty investigation into corrosion-resistant steel (CORE) imported from Vietnam, alongside nine other countries and territories.
Read More

Your care

Latest Most read
Linkage - the "key" to sustainable development of agricultural value chains

Linkage - the "key" to sustainable development of agricultural value chains

Promoting sustainable and effective development of agricultural value chains is a core factor in restructuring Vietnam's agricultural sector and the key to optimize the value of Vietnam's agricultural exports.
Supporting industry enterprises: Learning standards, understanding opportunities

Supporting industry enterprises: Learning standards, understanding opportunities

VCN - Currently, many potential industries have "opened" opportunities for Vietnamese enterprises to enter, such as the semiconductor industry, supporting industries for the aviation sector. However, the higher the added value of the sector, the more it r
Vietnam’s distinctive agricultural exports to China exhibited in Hanoi

Vietnam’s distinctive agricultural exports to China exhibited in Hanoi

An exhibition showcasing Vietnam’s distinctive farm produce exported to China opened in Hanoi on October 13, featuring the participation of 16 local enterprises and introducing over 50 categories of high-quality products from across the three regions of the country.
100 most valuable Vietnamese brands on the limelight

100 most valuable Vietnamese brands on the limelight

This year’s Brand Finance Vietnam 100 Report was also released to provide a comprehensive picture of the valuations.
Need to quickly act to catch up with the "green" trend

Need to quickly act to catch up with the "green" trend

VCN - With the movement from the global level to Vietnam's main markets, as well as the strong commitment of the Vietnamese Government, the trend of "compulsory green/sustainable transformation" has become clear to Vietnamese businesses instead of volunta
Mobile Version