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MBS: Inflation is predicted to remain low, monetary policy tightening is not yet needed


According to MBS analysts, despite pressures from petrol and raw material prices, Vietnam's inflation in 2022 is predicted to remain low. Therefore, the State Bank does not need to tighten monetary policy yet.

According to the latest data of the General Statistics Office (GSO), CPI in May 2022 increased by 0.38% compared to the previous month; increased by 2.48% compared to December 2021 and increased by 2.86% over the same period last year.

According to GSO, the increase in domestic gasoline prices in line with world prices, in addition to the increase in the price of food, foodstuffs, and the price of essential consumer goods and services in line with the price of input materials, are the main reasons for the increase in CPI in May.

On average, in the first five months of 2022, CPI increased by 2.25% over the same period last year, higher than the increase of 1.29% of the first five months of 2021, but lower than the increase of the first five months of 2017 - 2020; core inflation increased by 1.1%.

In the first quarter, gross domestic product (GDP) is estimated to increase by 5.03% year-on-year. Although lower than the 6-6.5% target set by the National Assembly for the whole of 2022, it is still higher than the growth rate of 4.72% in the first quarter of 2021 and 3.66% in the first quarter of 2020.

In which, the agriculture, forestry and fishery sector increased by 2.45%, accounting for 5.76% of the general increase; industry and construction increased by 6.38%, accounting for 51.08%; the service sector increased by 4.58%, accounting for 43.16%.

Foreign direct investment capital realized in Vietnam in the first four months of 2022 is estimated at USD 5.92 billion, the highest value in the first four months of the year in the 2018-2022 period, creating an important driving force for economic growth in 2022.

The Asian Development Bank (ADB) forecasts that Vietnam's economic growth will recover to 6.5% in 2022 and reach 6.7% in 2023. The World Bank (WB) forecasts that Vietnam's GDP growth will reach 5.3% in 2022, then stabilize around 6.5% in 2023.

The International Monetary Fund (IMF) lowered its forecast for global economic growth in 2022 to 3.6%, but believes that, in Vietnam, the economic recovery process will be strengthened from the implementation of the Socio-Economic Development and Recovery Program. The IMF forecasts that Vietnam's GDP will grow at 6% in 2022 and 7.2% in 2023.


Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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