Many factors help to control inflation

VCN - According to Dr. Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance, Student of Finance, with caution in making monetary policy, inflation in 2023 is likely to continue to decrease, with the goal of controlling inflation under 4.5% will be completed.
Reduce operating interest rates to promptly support businesses Reduce operating interest rates to promptly support businesses
Control inflation from flexibility of policy Control inflation from flexibility of policy
Many factors help to control inflation
Dr. Nguyen Duc Do, Vice President of Institute of Economics and Finance, Student of Finance.

How do you comment on the impact of continuously reducing operating interest rates on inflation control?

Currently, money supply growth is at a low level. The total means of payment as of June 20, 2023 only increased by 2.53% compared to the end of 2022, lower than the period of the Covid-19 pandemic. Due to weak aggregate demand, low credit demand, banks are also afraid to lend due to concerns about bad debts. This causes a sharp decline in the currency turnover rate. Moreover, despite reducing the operating interest rate, the real interest rate is still too high. According to the announcement of the State Bank (SBV), the average lending interest rate until mid-June 2023 is 8.9%. With the inflation rate over the same period currently at 2%, the real lending interest rate is 6.9%, which is higher than the GDP growth rate as well as the average real interest rate of the period 2013-2021 is 5.9% and 4.6%.

Along with the low money supply, facing with the difficulties of the economy and export market, the aggregate demand is weak, the exchange rate is stable because the world dollar is in a downtrend, while the oil price is difficult to increase sharply... but Vietnam The South is having a high trade surplus… These are the factors that will help curb inflation in the last six months of 2023, even into 2024.

With this development, the fact that the State Bank continued to reduce the operating interest rate, thereby increasing the money supply, inflation remained under control. With the current domestic and international economic context not very positive, along with the SBV's caution in making monetary policy over the past time, inflation in 2023 is likely to continue to decrease, and The target of controlling inflation below 4.5% this year will certainly be accomplished.

Many factors can affect inflation, including the increase in basic salary which will affect the market price situation, sir?

First of July is the basic salary period for which the increase is applied. However, this salary increase only applies to a part of cadres and civil servants, not to the entire economic sector, especially employees at enterprises. Wage growth is also low. Moreover, under the influence of more than two years of Covid-19, the economic downturn will exhaust the resources of the people, so vthe growth rate of spending will not be large, resulting in no impact on inflation.

What impact will have when the VAT reduction from 10% to 8% for some items, sir?

In theory, the reduction of VAT will help lower the cost of goods and services, and the input and output prices of businesses will also decrease. However, reducing VAT is a one-time reduction, while inflation is a dynamic issue, so reducing VAT has an impact on reducing market prices, but the impact on inflation is not large. Controlling inflation requires the overall management of the whole market, along with a synchronous and flexible coordination between fiscal and monetary policies.

Thank you Sir!

By HuongDiu (recorded)/Quynh Lan

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.
The impact of wage increases on inflation will not be too significant

The impact of wage increases on inflation will not be too significant

VCN - Addressing concerns related to wage and price increases, Dr. Nguyen Duc Do, Vice Director of the Institute of Economics - Finance (Finance Academy), believes there are not many factors causing sudden price surges in the last 6 months of 2024. Therefore, it can be expected that the rate of price increases in the last 6 months will be comparable to that in the first 6 months of 2024.
Outstanding results in cooperation in customs control and enforcement of ASEAN Member States

Outstanding results in cooperation in customs control and enforcement of ASEAN Member States

VCN - ASEAN Member States have implemented many programs and initiatives on customs cooperation in the fight against smuggling and trade fraud, and ensuring supply chain security.
Ha Tinh Customs strictly controls smuggling and illegal transportation of gold across border

Ha Tinh Customs strictly controls smuggling and illegal transportation of gold across border

VCN - If the past gold smugglers used to choose the southwest border provinces to bring smuggled gold into Vietnam, there has been a shift in location. On May 11, Ha Tinh Customs seized 4 kg of gold transported across the border of Cau Treo international border gate. Customs Magazine reporter had an interview with Mr. Nguyen Dinh Long (photo), Deputy Director of Ha Tinh Customs Department about anti-gold smuggling work.

Latest News

M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
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.
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ceiling and safety threshold approved by the National Assembly, ensuring national financial security, increasing proactive response to risks arising from external and internal causes of the economy.
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

VCN - Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment; renovating, upgrading, expanding, and constructing new construction items in projects that have been invested in and constructed in the past.

More News

Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Striving for average CPI not to exceed 4%

Striving for average CPI not to exceed 4%

VCN - According to the report of the Ministry of Finance, there are still some factors that put pressure on price levels in the remaining months of 2024, so the Ministry has updated 2 scenarios of average inflation in 2024 increasing in the range of 3.7-3.92%.
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

VCN - Discussing in groups about the project "1 law amending 7 laws" in the financial sector according to the program of the 8th Session on October 29, 2024, National Assembly delegates proposed that the Government should be assigned to make specific regulations on decentralization, granting the right to exempt and reduce taxes, and handling penalties for late payment of taxes...
Removing difficulties in public investment disbursement

Removing difficulties in public investment disbursement

VCN - According to the report of the Investment Department (Ministry of Finance), the estimated disbursement from the beginning of the year to October 31, 2024 is VND 355,616.1 billion, reaching 47.43% of the 2024 plan, reaching 52.29% of the plan assigned by the Prime Minister.
State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

VCN - According to the report sent to the National Assembly before the 8th Session of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
Rush to finalize draft decree on public asset restructuring

Rush to finalize draft decree on public asset restructuring

VCN - According to the Ministry of Finance, the draft Decree regulating the rearrangement and handling of public assets is being urgently completed by the Ministry of Finance to submit to the Government for promulgation.
Inspection report on gold trading activities being complied: SBV

Inspection report on gold trading activities being complied: SBV

The State Bank of Vietnam (SBV) has announced that inspections on compliance with legal policies in gold trading activities of credit institutions and gold trading businesses have been completed and an inspection report is being compiled.
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

VCN -The Government estimates that state budget revenue in 2024 will exceed VND 172.3 trillion, up 10.1% over the estimate, of which tax and fee revenue will reach 13.1% of GDP.
Read More

Your care

Latest Most read
M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
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
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ce
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Mobile Version