Dr Can Van Luc: The growth challenge remains significant in the last six months of the year

DNHN - According to Dr Can Van Luc, the largest difficulties to growth in 2022 remain in the last six months of the year, particularly when inflation pressures rise, jeopardizing macroeconomic stability.

As a result, the consumer price index (CPI) grew by 0.69 per cent in June 2022 compared to the previous month, 3.18 per cent compared to December 2021, and 3.37 per cent compared to the same time last year. 

In comparison to the second quarter of 2021, the second quarter of 2022 rose by 2.96 per cent on average. CPI climbed by 2.44 per cent on average in the first six months of the year, while core inflation increased by 1.25 per cent.

As a result, the consumer price index has risen dramatically since 2021. Although the average CPI in the second quarter was still fairly low, less than 3%, Mr Luc believes that from now until the end of the year, this index is likely to rise considerably. CPI may be 3.8-4.2 per cent for the whole year, above the Government's cap. This index will stay at 4% in 2023.

Mr Can Van Luc said that the reason Vietnam's inflation remained low in the second quarter and early 2022 was due to the global and country lag. World inflation is now at an all-time high.

In the United States, inflation reached 8.6 per cent in May, the highest level since 1981, in the backdrop of rapidly rising food and fuel costs that show no signs of abating. 

The US Department of Labor revealed fresh statistics indicating a dramatic spike in inflation, with gasoline prices increasing by 34.6 per cent and basic food prices increasing by 11.9 per cent over the same time last year, the largest increase since 1979. It is worth noting that inflation in the United States is expected to exceed 9% in June.

Inflation and global fuel costs are continually rising, exerting significant pressure on the local economy through gasoline prices and import and export activity.

Furthermore, inflation in Vietnam has a lag owing to variables such as basic pay and service costs, which have not yet risen but will in the next months, according to Mr Luc.

Mr Luc also mentioned additional issues facing the Vietnamese economy from now until the end of 2022, such as mounting public debt and a growing budget deficit.

Notably, the deployment of public investment funds, which is seen as a key engine of development, remains very sluggish. In the first six months of 2022, the expected rate of distribution of planned capital was 27.75 per cent of the plan given by the Prime Minister, a little reduction from the same time in 2021. (29.02 per cent).

Mr Luc, on the other hand, identified four drivers of economic development in the second half of the year. To begin with, the manufacturing and processing industries continued to expand rapidly.

The added value of the whole sector is expected to expand by 8.48 per cent in the first six months of 2022 compared to the same time last year (in the first quarter, it increased by 6.97 per cent; in the second quarter, it increased by 9.87 per cent). In which the processing and manufacturing industries expanded by 9.66 per cent (in the first quarter, by 7.72 per cent, and in the second quarter, by 11.45 per cent), contributing 2.58 per cent to the overall country's gain in total added value.

After the outbreak, the service and tourist sectors have also taken substantial recovery measures. Total retail sales of consumer goods and services are expected to be 471.8 trillion VND in June 2022, up 1.4 per cent from the previous month and 27.3 per cent from the same period last year; the second quarter of 2022 is expected to be VND1,395.1 trillion, up 5.5 per cent from the previous quarter and 19.5 per cent from the same period last year.

On the demand side, exports increased significantly. Export turnover of goods in June 2022 is estimated to be 32.65 billion USD, up 5.6 per cent from the previous month; the second quarter of 2022 is estimated to be 96.8 billion USD, up 21 per cent from the same period last year and 8.7 per cent from the first quarter of 2022; and the six-month total is estimated to be 185.94 billion USD, up 17.3 per cent from the same period last year.

The positive economic growth is also evident in business recovery, with a significant rise in the number of newly founded firms returning to the market.

According to Mr Luc, the effect of the Government's economic recovery program will provide numerous possibilities for enterprises and the Vietnamese economy to recover and flourish the next time. If the macroeconomy is stable, the government's GDP growth rate is achievable.

An Thao