Vietnam’s number one priority at the moment is to contain inflation, stabilize macroeconomic conditions and boost socio-economic recovery.

Prime Minister Pham Minh Chinh at the meeting. Source: VGP

Prime Minister Pham Minh Chinh highlighted the measures at a meeting on July 28, right after the Federal Reserves (FED) raised its policy rate by 0.75 basic points and central banks around the world opted for hiking interest rates to deal with rising inflationary pressure.

A government report suggested that amid rising global uncertainties, especially the Russia-Ukraine conflict and the complicated Covid-19 situation, Vietnam remained a bright spot for curbing inflation and staying firmly on the path of recovery.

Chinh, however, warned changes in economic policies in countries around the world have disrupted the global chains and caused negative impacts on Vietnam’s economy, especially in import-export, and prices of input materials.

“Vietnam’s economy with a high level of openness and limited size is vulnerable to potential external shocks,” Chinh warned.

In the coming time, Chinh called for the Government to continue combating Covid-19, including the acceleration of the vaccination drive while taking steps to restructure the economy and revise the growth model, with a focus on technological application and digitalization.

“Green growth, energy transition, and climate resilience are the foundation for sustainable development,” he stressed.

The Prime Minister also expected Vietnam to adopt a cautious monetary policy and manage interest rates flexibly to aid the business community, in which credit should be channeled into production activities, development of industrial parks, and social housing projects.

According to Chinh, efforts are required to further cut taxes and fees, improve public investment performance and attract investment capital to boost growth.

Chinh called for measures to boost domestic consumption and diversify export markets, as well as support the labor market to ensure a sufficient labor force for the economy.

He also mentioned the necessity for the healthy development of the capital market for greater efficiency and sustainability.

“The key is to supervise market prices, especially those of strategic commodities for the economy,” he added.

Vietnam’s consumer price index (CPI) during the first six months of 2022 expanded by 2.44% year-on-year, below the Government’s target of 4%.

Major financial institutions expected Vietnam’s inflation to stay on track this year, of them, the International Monetary Fund (IMF) suggested a 3.9% inflation rate.

The World Bank echoed IMF’s view with a similar prediction, noting a surge in prices of gasoline and diesel has been the main reason behind the high inflationary pressure.

HSBC in a study released on July 6 expected Vietnam’s inflation to average 3.5%, but noted price pressure will become stronger in the second half of this year.