The picture of inflation control in 2023

	Three scenarios for price administration of 2023
	Monetary policy must prioritize inflation control
	Wage hike needs to keep up with inflation control

In 2023, the National Assembly set a target of about 4.5% increase in the consumer price index (CPI). Photo: Internet

Many "variables" impact

In the Resolution on the socio-economic development plan in 2023, the National Assembly set the target of the growth rate of gross domestic product (GDP) at 6.5%; the growth rate of the consumer price index (CPI) is about 4.5%. 2023 - a pivotal year to realize the target of the 5-year socio-economic development plan 2021-2025. This is the National Assembly's high determination; however, the implementation of the CPI target of 2023 won't be easy.

According to Mr Nguyen Minh Tien, Director of the Price Management Department, Ministry of Finance, in 2023, the world economic growth is forecasted to slow down, high inflation will continue to persist, and the possibility of economic recession will become clearer, especially in large economies, increasing the risk of political and social instability in some countries. Along with that, strategic and geopolitical competition between countries in the world is still taking place; financial and monetary markets of developing countries face many risks; energy security, food security, natural disasters, epidemics, climate change, storms, floods and droughts continue to be issues of concern.

According to a representative of the Price Management Department, our country's economy depends a lot on imported raw materials, so it will face the risk of import inflation due to the upward trend in prices of raw materials and strategic commodities on the world market and exchange rate risk. Along with that, the implementation of the market price roadmap for several state-managed commodities has been delayed in recent years, which will also pose challenges to the management and administration of prices right from the beginning of the year. In addition, economic support and stimulus policies will also have a certain impact on the price level.

Economist Le Quoc Phuong considered that it is not easy to achieve the target of controlling inflation in 2023. The global GDP in 2023 is forecasted to decline, increasing by only 2.5% (lower than the 3.2% rate of 2022). The economies that are the main partners of Vietnam (USA, EU, Japan) are at risk of falling and recession. Furthermore, our country will experience adverse effects on exports and FDI. These are two critical factors contributing to Vietnam's GDP growth.

On the other hand, experts also commented that, at present, Vietnam's macroeconomic background is relatively stable (low public debt, low budget deficit, relatively stable exchange rate and an export surplus in many continuous years), which creates a premise for macroeconomic stability in 2023. Low inflation below 4% in the past 7 years (2015-2022) will be a good premise to maintain CPI below 4 .5% in 2023.

Positive forecast

Facing positive and negative factors affecting inflation control in 2023, many experts have made specific predictions.

According to economist Ngo Tri Long, the average CPI forecast in 2023 will be at 4 - 4.5% (from 3.15% in 2022) due to high imports and a larger money supply seasonally in late 2022. In addition, next year is also the time to accept an increase in some items managed by the state (basic salary, electricity price, health care, education).

Mr Ngo Tri Long said that before, many opinions suggested that Vietnam's inflation in 2023 could surpass 4.5%, given by some organizations. The main reason is that the delay of the recovery package, socio-economic development and inflation in key partner economies will likely remain high next year. However, this expert said that if the Government still resolutely implements the inflation control target in the new year for 2021-2025, inflation is expected to be at 4%.

According to Mr Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance, in the coming time, inflation over the same period in Vietnam will tend to decrease gradually after peaking in January 2023 thanks to the prudential monetary policy of the State Bank in 2022, as well as the risk of the world economy falling into recession. Inflationary pressure in 2023 may come from the state's adjusting prices for health and education services and electricity prices. Even so, if the price adjustment made in the second half of 2023 is not too large, the target of controlling inflation around 4.5%, or even below 4%, is feasible.

The Price Management Department said that to achieve the target of controlling inflation at 4.5% set by the National Assembly, the price management in 2022 in particular and the period of 2015 - 2022 in general needs to continue actively and flexibly. Accordingly, ministries, branches and localities will have to closely monitor economic developments and world inflation to have appropriate response solutions, closely update the domestic supply and demand situation to have contingency instructions, and ensure supply and balance domestic supply and demand.

Along with that, the Government also needs to implement a prudential monetary policy, ensure initiative and efficiency and coordinate with the administration of the expansionary fiscal policy reasonably and attentively. In addition, other policies contribute to stabilizing the macro-economy, controlling inflation according to the set targets, ensuring major balances of the economy, implementing core inflation control, and forming the basis for general inflation control.

In parallel, it reviews the application of fiscal policies, especially those about to expire, studying options for extending/adjusting the end of policies at a favourable time to reduce the negative impact on inflation in 2023.