Existing 2022 inflation pressure

DNHN - When several variable factors conspire to drive up the costs of numerous natural commodities and raw resources, resulting in inflationary pressure in several nations, not just Vietnam. Economists anticipate that inflation pressures will be evident in 2022, but will not be alarming and the forecast will remain within the target range.

Dr Truong Van Phuoc, former Chairman of the National Financial Supervisory Commission shared: Surely this year inflation will increase. With the amount of money in the past two years being pumped out to save the economy affected by the COVID epidemic. Global inflation is forecast to be around 6%, even exceeding this level. World economic growth was previously forecast at 3.9%, now adjusted to about 3.4%.

Dr Phuoc emphasized: "Additionally, the supply chain disruptions over the last few years have been horrific. Military conflicts exacerbate the difficulty of resuming supply chain disruption. This also exerts pressure on the global commodity market".

Global inflation will likely climb in 2022, economic growth will slow, and the global supply chain will be tough to rebuild. The conflict's story never ends; there are numerous scenarios; some believe it will finish in March, some believe it will endure a few months, and others believe it will escalate for several years. This was not anticipated!

Vietnam's economy is highly open; imports and exports account for more than double the GDP, therefore its absorption and impact on the world are easily understood. In Vietnam, the growing price level exerts downward pressure on inflation. A 10% increase in fuel prices is predicted to have a 0.4 per cent effect on domestic inflation. 

Although inflation is not just determined by the price of gasoline but also by the price of a variety of other goods, gasoline continues to play a significant role. As the price of fuel rises, it will affect transportation, including the transportation of products. 

Mr Phuoc said: "Inflation in Vietnam is likely to increase. There are many opinions that it will increase. I think that in 2021, domestic inflation will be 1.84%, this year, it is estimated that inflation will be around 3.5-3.8%. , restrained below 4%". 

Vietnam with an inflation forecast of about 3.5-3.8%, depends on the price of gasoline, but at the same time, inflation in Vietnam also depends on how the market is managed. For example, in the petroleum market, the state has a stabilizing policy mechanism, and public products and services such as health care, education, and traffic also have other policies. 

Although the oil price is forecasted to reach 185-200 USD, even Russia thinks it can reach 300 USD, but the oil price has adjusted from 130 USD/barrel, then dropped to 109 USD when the UAE urged OPEC to increase Quantity. Besides, the price of gold, after soaring to nearly $2,070/oz, also fell below $2,000.

Nowadays, disagreements have arisen with a plethora of new variables, indicating that other nations’ central banks are being extremely circumspect while tightening monetary policy. Specifically, interest rate hikes will likely slow, with less dosage, as they do not want to add to the difficulty of the epidemic; additional armed conflicts jar the global market, but they tighten the currency. would obliterate all government attempts to rehabilitate the economy.

According to Dr Vo Tri Thanh, economist, director of the Institute for Brand Development and Competition Research, inflation pressure on Vietnam's economy has appeared since the second half of 2021, basically cost-push, from limited supply, due to logistics, supply chain disruptions, etc. Going into this year, these problems will become even more serious.

The second factor that puts pressure on inflation is the price of oil, which in the current period when oil prices continue to increase sharply causing inflation.

Another problem that many countries around the world are facing is inflationary pressure from the economic recovery and development program to deal with the impacts of the COVID-19 epidemic when injecting money to promote economic growth. economic recovery and development.

Dr Thanh emphasized:”Therefore, forecasts from the beginning of the year suggest that the average inflation rate for the whole year 2022 will be below 4%. But with the current situation, especially with the conflicts in Russia and Ukraine, I am afraid that the target of controlling inflation below 4% is difficult to achieve. 

Therefore, the solutions that have been calculated for the recovery and development program, if they want to achieve this goal, they need to calculate, consider more carefully as well as need additional solutions to reduce this pressure. Of course, the result, inflation can be 4% or 5% but at an acceptable level.

Currently, many additional solutions have been put in place to contribute to repelling inflationary pressure such as: Unblocking the bottleneck in petroleum supply or partially repealing the terrible impact of the increase in gasoline prices with the policy of reducing gasoline prices. taxes and fees. Urgent solutions at this time will be effective in reducing inflationary pressures besides the monetary solutions that have been calculated before”. 

Meanwhile, Assoc. Prof. Dr Ngo Tri Long - economist - said that controlling inflation in 2022 is not easy. According to Mr Long, the world economy has recovered and gradually recovered, commodity prices are tending to increase.

Ngo Tri Long, an expert, stressed and advised that gasoline prices should be managed flexibly, closely tracking global petroleum product prices:”When the economy recovers in 2022, under the impact of economic recovery and development support packages, increasing consumption and investment demand will put great pressure on prices. Besides, the possibility of adjusting the state-managed goods such as electricity, water, health care, and education prices may occur, creating significant inflationary pressure for Vietnam”.

Mr Nguyen Bich Lam, former Director of the General Department of Statistics and Information: Currently, the Government is urgently implementing the program of socio-economic recovery and development with a scale of 350 trillion dongs along with other agencies. The support package of 2021 is permeating all areas of the economy, causing a sudden increase in aggregate demand, which is huge pressure on inflation in 2022.

Especially in the fiscal and monetary policy package of 350 trillion dongs, over 32% is for investment in infrastructure development. Disbursing investment capital for infrastructure construction in the context of an inadequate supply of construction materials will create more inflationary pressure.

It can be seen that in 2022, the inflationary pressure of our economy comes from the combination and resonance of both the sudden increase in aggregate demand and the difficulty of supply meeting the increase in aggregate demand; in which the second factor plays a major and larger role in increasing inflation of the economy. In other words, inflation pressure in 2022 of our country has come from both macroeconomic issues as well as global and domestic supply chain inflation.

Mr Lam said that to successfully achieve the inflation target in 2022, the Government, localities and the business community need to implement many important solutions.

That is, the Government needs to promptly remove difficulties and obstacles related to administrative mechanisms, policies and procedures, review and abolish unreasonable regulations to cut input costs for businesses, create A fair and open business environment that promotes aggregate supply and reduces inflationary pressures.

The State Bank continues to operate proactively, flexibly and synchronously with monetary policy tools, ensuring liquidity for credit institutions; operating interest rates and exchange rates in line with the macro balance, flexibly in line with market developments, contributing to macro stability and inflation control. Operating monetary policy in close and effective coordination with fiscal policy and other policies.

The Ministry of Finance shall review and recalculate the cost levels in the basic price structure of petroleum products and taxes and fees, especially the environmental protection tax, to ensure the correct calculation, sufficient calculation, and the harmony of benefits. benefits between petroleum trading enterprises, consumers and petroleum users, ensuring the realization of the target of stabilizing the market, reducing inflationary pressure from petrol and oil, and supporting production and business.

The Ministry of Industry and Trade timely grasps world petroleum prices, improves forecasting capacity and quality, and has overall solutions to ensure adequate long-term petroleum supply. The Ministry should propose to the Government to expand and improve the capacity of petroleum reserves to meet the needs of the economy longer, reduce dependence and the harmful effects of high world gasoline prices on stability and quality. economic development.

The Ministry of Industry and Trade and the Ministry of Finance transparently and simplified the trade process; encourage and promote information sharing on trade and prices; promote domestic competition in logistics, wholesale and retail trade to reduce domestic and international trade costs, and keep the competitiveness and market share of Vietnamese goods in the world market.

The Government's Price Management Steering Committee directs relevant ministries to effectively and flexibly perform the role of regulating and stabilizing prices of state-managed commodities. Decide on the appropriate time and extent to adjust the price of electricity and services managed by the State to avoid resonance with cost-push inflation, creating expected inflation of the economy.

The business community actively prepares all conditions for conducting production and business, ensuring the supply and circulation of goods. For short-term shortage items, it is necessary to have a solution to promptly import raw materials and cut production costs; For long-term shortage items, it is necessary to actively seek alternative sources and supply partners.

Additionally, media organizations must conduct effective communication activities to promptly, accurately, and inform the public about the government's policies and solutions, as well as eliminate false information about market prices, thereby avoiding the psychological inflation caused by misinformation.

Bich Hang