ABSTRACT This essay delves into the intricate landscape of controlling inflation in Vietnam and the global economy, spanning the pivotal years from explores the multifaceted strategies a
Forecast of the Asian Development Bank (ADB)
On July 19, 2023, the Asian Development Bank (ADB) projected an increase in the regional growth rate for Asia, as highlighted in its Asian Development Outlook report, amid declining fuel and food prices.
Vietnam's economic growth is projected to stabilize at 5.8% for 2023 and 6% for 2024, as supply chain disruptions and rising interest rates impact the market The recovery forecast from April 2023 indicated growth rates of 6.5% and 6.8%, but weakening external demand poses challenges to this outlook.
The report highlights key factors impacting the economy, including the global economic recession, monetary tightening in developed nations, and rising geopolitical tensions worldwide Additionally, inflation forecasts have been adjusted downward, with projections for 2023 revised from 4.5% to 3.8% and for 2024 from 4.2% to 4%.
ADB country director for Vietnam, Mr Shantanu Chakraborty said:
Vietnam's export-oriented manufacturing sector has faced challenges due to a weak external environment, leading to a decline in industrial production Nevertheless, the economy shows resilience and is poised for a swift recovery, driven by robust domestic consumption, manageable inflation, accelerated public investment disbursement, and enhanced commercial activity conditions.
2.3.2 Forecast by Dr Nguyen Duc Do fl Deputy Director of the Institute of Financial Economics
Dr Nguyen Duc Do, Deputy Director of the Institute of Financial Economics, commented on the domestic inflation situation, indicating that the cautious monetary policy implemented in 2022, combined with the potential risk of a global economic recession in 2023, is likely to alleviate inflationary pressures.
Figure 2.6 View of the workshop this year not too great
"Inflation over the same period last year is likely to peak in January
In 2023, average inflation in Vietnam is projected to be around 3.5%, according to Dr Nguyen Duc Do, who suggests that inflationary pressures will not be significant He notes that factors influencing inflation, such as currency fluctuations, exchange rates, and the costs of fuel and raw materials, likely reached their peak in 2022 and are expected to decline in 2023.
In 2022, the Vietnamese economy showcased a notable achievement with a 3.15% increase in the consumer price index compared to 2021, as highlighted by Associate Professor Dr Ngo Tri Long This growth reflects effective inflation control amidst global challenges, including hyperinflation and significant price fluctuations.
Vietnam is categorized among countries with low inflation rates, even as global inflation rises According to Associate Professor Dr Ngo Tri Long, an analysis of the average annual Consumer Price Index (CPI) from 2018 to 2022 reveals minimal fluctuations, indicating a stable and sideways movement in CPI trends.
In 2023, gasoline prices are expected to decline as China reopens its economy following the end of its zero-Covid policy Additionally, agricultural production in our country continues to thrive, contributing to a remarkable GDP growth of 8.02% in 2022, marking the highest increase in over a decade.
In 2023, the average Consumer Price Index (CPI) is expected to range between 3.2% and 3.5%, remaining below the target established by the National Assembly, according to Associate Professor Dr Ngo Tri Long.
2.3.3 Forecast by Dr Nguyen Bich Lam fl Former Director General of the General Statistics Office
International financial organizations anticipate a rise in gasoline prices due to recent decisions by the Organization of Petroleum Exporting Countries (OPEC) and its allies to reduce production Additionally, the Russian Federation has indicated a potential oil production cut of 5% to 7% in early 2023, which is expected to significantly influence global oil market prices (Thuc Anh, 2022).
Over the past few years, domestic electricity prices have remained stable despite rising coal and gas prices used in electricity generation This trend highlights the challenges within the thermal power structure and the reliance on gas power for energy production.
Electricity generation accounts for a significant portion of total energy production, prompting the Government to consider adjusting electricity prices to ensure sufficient resources meet economic demands An increase in electricity prices in 2023 could lead to heightened inflation due to rising production costs and consumer spending, potentially hindering economic growth Calculations indicate that an 8% rise in electricity prices could elevate inflation by 0.5%, while a 10% increase may push inflation up by 0.61%.
On November 11, 2022, the National Assembly approved a resolution regarding the 2023 state budget, which includes a significant increase in the base salary Starting July 1, 2023, the base salary will rise from 1.49 million VND to 1.8 million VND per month, marking a 20.8% increase This adjustment is expected to contribute to an inflation rise of 0.67%.
Inflation pressure in 2023 also comes from the ability to adjust according to the roadmap to increase prices of services managed by the State such as education and health services
In 2022, the price index for raw materials and fuels used in production rose by 6.79% compared to 2021, while the price index for imported goods surged by 8.56% Consequently, the producer price index for agricultural, forestry, and aquatic products increased by 3.89%, the industrial product producer price index grew by 4.24%, and the service producer price index saw a rise of 3.69% Notably, the producer price indexes across all three regions outpaced the average inflation rate of 3.15%.
2022, which will spread to consumer prices in 2023
The situation of inflation in the world from 2020 to early 2023 17
The situation of the inflation in the world from 2020 to
The COVID-19 pandemic in 2020 profoundly affected the global economy, as widespread lockdown measures temporarily halted economic activities This disruption led to a notable decline in the global inflation rate, which fell to 1.93%, reflecting a decrease of 0.28% compared to previous years.
In 2021, the global economy demonstrated resilience amid the COVID-19 pandemic, avoiding recession and achieving a swift recovery with a global inflation rate of 3.48%, up 1.55% from 2020 However, 2022 presented significant challenges, including the Russia-Ukraine conflict, an energy crisis, and stricter monetary policies in developed nations, leading to persistently high inflation rates, which soared to 8.27%, a 4.8% increase from the previous year.
Between 2019 and 2022, the global inflation rate experienced significant fluctuations, reflecting ongoing challenges in the financial markets These variations underscore the difficulties faced by the global economy in achieving stability and recovering from the effects of the COVID-19 pandemic.
The economic landscape in the United States has faced considerable challenges, particularly due to the COVID-19 pandemic In 2020, the inflation rate fell to 1.23%, a decline from 2019 However, by 2021, inflation surged to 4.70%, driven by ongoing pandemic disruptions The latter half of 2022 saw inflation escalate further to 8.00%, influenced by global factors, including the Ukraine crisis and subsequent sanctions on Russia, which significantly raised oil prices and intensified inflationary pressures in the U.S economy.
Figure 3.8 Inflation rate in the United States in 2019 -
The situation of inflation in the world from early 2023
2023 According to the "World Economic Outlook" report released in July
In 2023, the global inflation rate is projected to decline from 8.7% in 2022 to 6.8%, as the world continues to navigate a slow and uneven recovery from the pandemic and the ongoing Russia-Ukraine conflict Despite earlier signs of economic recuperation, including increased activity and reduced inflation, significant challenges remain in achieving a balanced recovery Addressing regional disparities and uncertainties is essential, highlighting the fragile state of the global economy Continuous monitoring and the implementation of effective policies will be vital for fostering sustained economic stability worldwide.
In the first half of 2023, the U.S economy has shown remarkable recovery, alleviating initial recession fears despite earlier pessimism and Federal Reserve interest rate hikes The market, while experiencing fluctuations, has demonstrated unexpected resilience and the potential for a soft landing As of September, the inflation rate stands at 3.7%, which, although above the Federal Reserve's target, remains manageable Overall, these developments highlight the adaptability and strength of the U.S economy amid global economic fluctuations.
The policies of the world government to control the inflation
To effectively manage inflation, the government must implement targeted measures to regulate demand Ineffective strategies, such as not adjusting interest rates according to annual inflation and poorly managing the domestic money supply, can result in rampant inflation While governments have limited tools to combat this issue, broad-based price controls can be employed with varying degrees of success Currently, tight monetary policies are a popular approach for controlling inflation, yet achieving a "soft landing" remains a difficult task.
The government can combat inflation through fiscal policy by increasing taxes or cutting expenditures, which leads to reduced personal demand and a smaller money supply However, raising taxes is often politically unpopular, especially during inflationary periods Instead, alternative fiscal measures, such as limiting pandemic relief spending, can be implemented to ease inflationary pressures.
Solutions for Vietnams sitUatiOn cà 19 4 THE TRENDS IN INFLATION FOR VIETNAM AND THE WORLD IN THE
The Government and Sectoral Management Ministries propose a proactive fiscal policy combined with flexible monetary strategies to create an effective economic framework that supports sectors impacted by the COVID-19 pandemic while controlling inflation Emphasizing the need for vigilant monitoring of global price trends and potential risks, the proposals advocate for timely and transparent communication regarding government price management Additionally, they highlight the importance of diplomatic efforts to secure raw material sources and the promotion of a digital economy to alleviate long-term inflationary pressures.
Effective cooperation and coordination among sectoral management ministries are crucial for economic stability The Ministry of Industry and Trade must respond to global economic changes, regulate domestic production, and monitor essential goods and fuel prices Meanwhile, the Ministry of Construction should stabilize the construction material market and enhance domestic production capabilities The Ministry of Transport needs to improve oversight of pricing and ticket sales in the transportation sector, while the Ministry of Education and Training should develop pricing scenarios for educational services to assess their impact on the Consumer Price Index, aiding in effective inflation control.
4 THE TRENDS IN INFLATION FOR VIETNAM AND
THE WORLD IN THE NEAR FUTURE, 2024f12025
Economic experts's forecasts of Vietnam’s inflation trends
DỤ KIỂN LAM PHAT CPI BINH QUAN TAI VIET NAM
Figure 4.9 Expected average CPI inflation in
Economic analysts, such as Mr Nguyen The Minh from Yuanta Vietnam Securities Company, predict challenges for Vietnam's economy in 2024, primarily due to the ongoing conflict in Israel, which is likely to drive global oil prices higher and exacerbate inflationary pressures Mr Minh highlights the potential for a short-to-medium-term increase in oil prices stemming from geopolitical tensions, which could negatively impact Vietnam's market Furthermore, rising inflation in the US raises concerns that the Federal Reserve may persist in tightening monetary policy, adding to the economic challenges faced by Vietnam.
Vietnam faces domestic challenges, with the World Bank's senior economist, Ms Dorsati Madani, highlighting the impact of prolonged inflation and tightened monetary policies, particularly in the US The
The World Bank predicts that Vietnam will experience controlled inflation in 2023, with the Consumer Price Index (CPI) expected to average between 3% and 3.5% Looking toward 2024, as economic conditions improve and global inflation decreases, Vietnam's CPI is anticipated to rise to approximately 3.5% to 4%.
24 achieve growth goals, Vietnam is advised to focus on economic restructuring, promote public investment, stimulate domestic consumption, and enhance regional connectivity.
Economic experts's forecasts of global inflation trends
7 Global CPlinflation Advanced economies / Emerging markets ex China / China
Figure 4.10 Inflation rates around the world are forecast to have peaked trends
Global inflation trends are being closely examined by experts, including IMF Chief Economist Pierre-Olivier Gourinchas The IMF emphasizes the need for tighter monetary policies worldwide until inflation stabilizes at sustainable levels Current inflation rises are fueled by supply chain disruptions from COVID-19, labor market challenges in the US, and geopolitical tensions like the Ukraine conflict, leading to an uncertain global economic outlook.
The IMF predicts a gradual decline in global inflation, driven by falling energy and food prices, projecting rates of 6.3% in 2023 and 5.3% in 2024, with further reductions expected through 2025 Mr Gourinchas highlights significant global uncertainties, citing geoeconomic disintegration, sluggish productivity growth, and adverse demographic trends as factors contributing to a slowdown in medium-term economic growth.
The IMF emphasizes the importance of maintaining cautious monetary policies until inflation stabilizes sustainably, while also urging nations to bolster their fiscal buffers to address potential future challenges With a global economic growth forecast of 2.9% for the upcoming year, the current economic landscape remains difficult, underscoring the necessity for proactive measures to effectively manage these complexities.
The intricate tapestry of the global economic landscape weaves a compelling narrative, particularly when examining the nuanced dance of inflation rates This essay embarks on a journey through the years
From 2020 to 2023, we explore the macroeconomic dynamics of Vietnam and the global economy amid unprecedented events such as the COVID-19 pandemic and rising geopolitical tensions This period highlights the complexities, challenges, and strategic responses that have significantly influenced these economic landscapes.
In Vietnam, the government's strategic response to challenges has been notable, implementing policies such as interest rate support and tax reviews to navigate the pandemic's impacts while maintaining economic stability The average Consumer Price Index (CPI) growth rate reached 3.23% in 2021, reflecting a commendable achievement amidst significant uncertainties.
The global economy experienced significant fluctuations in inflation rates, dropping to 1.93% in 2020 as a result of the initial pandemic shocks, before surging to 8.27% in subsequent years.
2022, fueled by the Russia-Ukraine conflict and energy crises The U.S., a key player, faced its own challenges, grappling with an inflation rate of 8.00% in 2022
As we look ahead, expert predictions suggest that Vietnam's economy, while resilient, may encounter challenges in 2024 due to global oil price fluctuations and the potential impacts of rising inflation in the U.S The World Bank forecasts that inflation will remain controlled, estimating a rate of around 3-4%.
The IMF promotes cautious optimism worldwide, recognizing the uncertainties posed by geopolitical disintegration, labor market challenges, and demographic trends Despite these challenges, a gradual decline in global inflation is expected, with projections indicating a decrease to 5.3%.
2024 The call for countries to remain vigilant on monetary policies echoes in the face of a challenging economic environment
In the realm of macroeconomic intricacies, the journey from 2020 to
In 2023, resilience and adaptation are key themes as we face various challenges Emphasizing sustainable strategies, proactive policies, and global cooperation is essential for achieving stability in a constantly changing economic landscape.
27 situations outlined in this exploration provide valuable insights for policymakers, economists, and stakeholders, guiding the way forward in an interconnected world
Calculator, U | (n.d) Current US Inflation Rates: 2000-2023 Retrieved October 28th, 2023, from US Inflation Calculator: https://www.usinflationcalculator.com/inflation/current-inflation- rates/
The International Monetary Fund (IMF) has projected that the global economic outlook for the coming years will remain mediocre, indicating a period of sluggish growth Despite ongoing recovery efforts, various factors are contributing to this subdued forecast, prompting concerns among economists and policymakers The IMF's analysis highlights the need for strategic measures to enhance economic resilience and foster sustainable development in the face of persistent challenges.
Dr Lâm, N B (2023, January 30th) Dự báo lạm phát năm 2023 Retrieved October 29th, 2023, from Tạp chí Kinh tế và Dự báo: https://kinhtevadubao.vn/du-bao-lam-phat-nam-2023-
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In 2024, Vietnam's economy is expected to recover more robustly, with a potential growth rate of 6.5% This positive outlook reflects the resilience of the Vietnamese economy and its capacity to adapt to challenges, positioning it for a stronger economic performance in the coming year.
On the eve of Davos 2023, experts are questioned about the possibility of reducing inflation without triggering a recession, highlighting the delicate balance policymakers must maintain to ensure economic stability.
Ngân hàng Phát triển châu Á (ADB) dự báo rằng tỷ lệ lạm phát ở Việt Nam sẽ giảm xuống mức 4% trong thời gian tới Dự báo này được công bố trong bối cảnh nền kinh tế Việt Nam đang đối mặt với nhiều thách thức ADB nhấn mạnh rằng việc kiểm soát lạm phát sẽ là một yếu tố quan trọng để duy trì sự ổn định kinh tế và phát triển bền vững.
In a recent article by Hưng (2023), published in Báo Nhân Dân, the author discusses the importance of flexible policies in effectively controlling inflation The piece emphasizes that adaptive strategies are crucial for maintaining economic stability and mitigating the impact of rising prices By implementing responsive measures, policymakers can better manage inflationary pressures and support sustainable economic growth The article highlights the need for ongoing assessment and adjustment of these policies to ensure their effectiveness in the current economic climate.
Hưng (2023) discusses the importance of flexible policies in controlling inflation, highlighting that adaptive measures can effectively stabilize the economy The article emphasizes the need for timely interventions and strategic adjustments to maintain price stability and foster sustainable growth By implementing responsive economic strategies, policymakers can mitigate inflationary pressures and enhance overall financial resilience.
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%20Reduction%20Act,energy%20manufacturing%2C%20and