[NEWS] - IMF: Warns of increasing inflationary pressure in Vietnam

The strategy of " living safely with the epidemic " has helped Vietnam’s economy to be gradually restored. GDP grew by 6% in 2022 and will reach 7.2% in 2023. But the International Monetary Fund (IMF) has warned that inflation and financial risks could rise.

Vietnam’s economy is gradually recovering thanks to the strategy of "living together safely with the epidemic" as well as the implementation of effective and effective vaccines that have helped Vietnam overcome the severe pandemic wave in 2021. But The recovery so far has been rather volatile, with many areas still lagging, while financial risks and inequality could increase. The International Monetary Fund (IMF) has announced that inflation in Vietnam is forecast to increase to 3.9%, almost close to the control target set by Vietnam.

Also adding that the conflicts in Ukraine and Russia are expected to have a moderate impact with the recovery and inflation in Vietnam, Ms. Era Dabla – Norris (Head of Department at Asia and Pacific Department IMF) commented. However, the International Monetary Fund still assesses that inflation is still under control even though the prices of goods and raw materials are increasing. This partly shows us that economic activities are still in moderation.

Ms. Era Dabla – Norris added that there are significant risks to the growth outlook. Accordingly, many factors will influence that can cause growth to decrease and inflation to increase.

Immediate risks include increasing geopolitical tensions and slowing growth in China. Other risks include the trend of global financial tightening, developments in the real estate market and corporate bonds.

The factors of supply of goods and geopolitical tension have also been warned by Standard Chartered for fear of increasing inflation in Vietnam. However, this bank is less optimistic when it thinks that the index will surpass 4% in 2022, even, reach 5.5% in 2023.

The representative of the International Monetary Fund (IMF) gave some recommendations for Vietnam to quickly and effectively implement the Socio-Economic Development and Recovery Program, which will play an important role in supporting support economic growth. This program will give reasonable priority to the health sector, economic recovery and medium-term growth prospects. Going forward, fiscal policy needs to strike a balance between supporting interim goals and accelerating economic transition, on the other. The overall fiscal deficit is forecast to increase moderately this year.

Ngoc Duc