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

Ho Chi Minh City achieves record state revenue of over VND500 trillion in 2024

Ho Chi Minh City achieves record state revenue of over VND500 trillion in 2024

VCN - For the first time in its history, Ho Chi Minh City’s budget revenue surpassed VND500 trillion in just 11 months of 2024.
Multiple drivers propel positive growth in budget revenue

Multiple drivers propel positive growth in budget revenue

VCN - Dr. Bui Dang Dung, former Deputy Chair of the National Assembly’s Finance and Budget Committee, believes that the 2024 state budget revenue results are highly encouraging, reflecting the concerted efforts of the Government, relevant agencies, and the business community amid challenging economic conditions.
Southern Customs contributed many practical contents on customs supervision and control procedures

Southern Customs contributed many practical contents on customs supervision and control procedures

VCN - The contents related to the articles and clauses of the draft Decree amending and supplementing Decree 08/2015/ND-CP and the circulars have been specifically commented on by Southern Customs units based on practical experience.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there are still difficulties, the economy is gradually returning to a high growth trajectory. In that context, it is necessary to let fiscal policy return to normal state.

Latest News

Seafood exports expected to exceed $10 billion in 2025: expert

Seafood exports expected to exceed $10 billion in 2025: expert

The achievement of the $10 billion export milestone in 2024 is attributed in part to efforts to open and strengthen connections with key markets such as the US and the EU.
Top 10 Reputable Animal Feed Companies in 2024: Efforts to survive the challenges of nature

Top 10 Reputable Animal Feed Companies in 2024: Efforts to survive the challenges of nature

VCN - In the Report announcing the Ranking of Top 10 Reputable Animal Feed Companies in 2024 on December 12, 2024, Vietnam Report Joint Stock Company said that Vietnam's animal feed industry has faced many challenges from natural disasters and epidemics. But overcoming all, the industry continues to survive and has confidence in the future.
Vietnam's import-export surges 15.3%

Vietnam's import-export surges 15.3%

Vietnam's total import-export turnover reached 745 billion USD as of December 14, marking a robust 15.3% growth compared to the same period in 2023, according to the General Department of Vietnam Customs.
More Vietnamese firms interested in Saudi Arabia: Ambassador

More Vietnamese firms interested in Saudi Arabia: Ambassador

An increasing number of Vietnamese enterprises are showing interest in Saudi Arabia, particularly in the sectors of Vietnam's advantages and the Middle East country's needs, a diplomat has said.

More News

“Give and Take” in the Value Chain of the CPTPP Market

“Give and Take” in the Value Chain of the CPTPP Market

VCN - Vietnamese businesses have many opportunities and advantages if they take advantage of resources from imports and technology transfers when joining the supply chains of FDI companies within the CPTPP.
Binh Dinh province works to attract investment from Japan

Binh Dinh province works to attract investment from Japan

The People’s Committee of Binh Dinh province on December 18 inked a cooperation deal with the Japan - Vietnam Friendship Association of Sakai city as part of the south-central province’s efforts to attract more investment and development resources from the Northeast Asian country.
Agricultural, forestry and fishery exports “reach the target” early

Agricultural, forestry and fishery exports “reach the target” early

VCN - According to a report from the Ministry of Agriculture and Rural Development, the export turnover of agricultural, forestry and fishery products in November 2024 is estimated at US $5.3 billion, up 13.9% compared to November 2023. It is notable that it not only “reaching the finish line” early, the agricultural sector also exceeded the annual plan by over US $ one billion.
Thailand remains Vietnam’s biggest trading partner in ASEAN

Thailand remains Vietnam’s biggest trading partner in ASEAN

The activities conducted by the Vietnam Trade Office in Thailand in 2024 have enriched the trade and investment relations between the two countries, contributing to helping Thailand maintain its position as Vietnam's largest trading partner in the Association of Southeast Asian Nations (ASEAN), according to Le Huu Phuc, Vietnam's Trade Counsellor in Thailand.
Rubber value soars in 2024: VRA

Rubber value soars in 2024: VRA

All Vietnam's rubber’s top 15 export markets saw growth in export values in 2024, with Malaysia recording the highest increase, expanding fivefold, followed by Sri Lanka at 3.7 times, according to the Vietnam Rubber Association (VRA).
Vietnamese businesses struggle to access green finance

Vietnamese businesses struggle to access green finance

VCN - Green finance is gradually becoming an indispensable tool in Vietnam to support businesses, promote sustainable development, and move towards the goal of Net Zero. However, the path to accessing green capital is full of barriers, especially for small and medium enterprises.
E-commerce: a gateway to boost Vietnamese commodities in the UK market

E-commerce: a gateway to boost Vietnamese commodities in the UK market

E-commerce stands out as a promising channel to further enhance Việt Nam’s trade presence in this dynamic market.
Agro-forestry-fisheries exports top 62 billion USD in 2024

Agro-forestry-fisheries exports top 62 billion USD in 2024

Vietnam’s agro-forestry-fisheries exports are projected to reach over 62 billion USD in 2024, and continue to grow next year, heard at a conference in Ho Chi Minh City on December 16.
Removing “bottlenecks” for digital transformation in industrial production

Removing “bottlenecks” for digital transformation in industrial production

VCN - Although implementing digital transformation towards smart production creates many opportunities, it also poses significant challenges for businesses, especially in terms of investment costs and human resources.
Read More

Your care

Latest Most read
Seafood exports expected to exceed $10 billion in 2025: expert

Seafood exports expected to exceed $10 billion in 2025: expert

The achievement of the $10 billion export milestone in 2024 is attributed in part to efforts to open and strengthen connections with key markets such as the US and the EU.
Top 10 Reputable Animal Feed Companies in 2024: Efforts to survive the challenges of nature

Top 10 Reputable Animal Feed Companies in 2024: Efforts to survive the challenges of nature

VCN - In the Report announcing the Ranking of Top 10 Reputable Animal Feed Companies in 2024 on December 12, 2024, Vietnam Report Joint Stock Company said that Vietnam's animal feed industry has faced many challenges from natural disasters and epidemics.
Vietnam's import-export surges 15.3%

Vietnam's import-export surges 15.3%

Vietnam's total import-export turnover reached 745 billion USD as of December 14, marking a robust 15.3% growth compared to the same period in 2023, according to the General Department of Vietnam Customs.
More Vietnamese firms interested in Saudi Arabia: Ambassador

More Vietnamese firms interested in Saudi Arabia: Ambassador

An increasing number of Vietnamese enterprises are showing interest in Saudi Arabia, particularly in the sectors of Vietnam's advantages and the Middle East country's needs, a diplomat has said.
“Give and Take” in the Value Chain of the CPTPP Market

“Give and Take” in the Value Chain of the CPTPP Market

Vietnamese businesses have many opportunities and advantages if they take advantage of resources from imports and technology transfers when joining the supply chains of FDI companies within the CPTPP.
Mobile Version