Picture of inflation control in 2023

In 2023, the National Assembly decides to increase CPI by 4.5%. Photo: Internet

Many "variables" affecting inflation

In the Resolution on the socio-economic development plan for 2023, the National Assembly sets a GDP growth target of 6.5% and a CPI growth rate of 4.5%. For 2023 - an important transitional year of the five-year socio-economic development plan 2021-2025, this is the National Assembly's high determination, but implementing the CPI target of 2023 will not be easy.

According to Mr Nguyen Minh Tien, Director of the Price Management Department, Ministry of Finance, in 2023, the world economic growth is forecasted to slow down and face prolonged high inflation and the possibility of economic recession, especially in large economies, increasing the risk of political and social instability in some countries. Furthermore, strategic and geopolitical competition between countries worldwide is still happening. Developing countries' financial and monetary markets will face many risks; energy security, food security, natural disasters, epidemics, climate change, storms, floods and droughts will be issues of concern.

According to Mr Tien, our country's economy heavily depends on imported raw materials, so we will face the risk of import inflation due to the upward trend in raw materials and strategic commodities on the world market and exchange rate risks. Moreover, the pressure from implementing the market price roadmap for several state-managed commodities will also pose challenges to price management from the beginning of the year. In addition, economic support and stimulus policies will also have a certain impact on the price level.

Economist Le Quoc Phuong said that it is not easy to achieve the inflation control target in 2023. Specifically, the global GDP in 2023 is forecast to decline, increasing by only 2.5% (lower than the 3.2% rate of 2022). The economies that are the main partners of Vietnam (USA, EU, Japan...) are at risk of falling in a recession. Not only that, Vietnam will face adverse impacts on exports and FDI. These are two important factors contributing to Vietnam's GDP growth

However, experts also commented that Vietnam's macroeconomic background is relatively stable (low public debt, low budget deficit, relatively stable exchange rate, and export surplus in consecutive years), creating a premise for macroeconomic stability in 2023. In which low inflation below 4% in the past seven years (2015-2022) will be a good premise for maintaining CPI below 4 .5% in 2023.

Positive outlook

Facing positive and negative factors affecting inflation control in 2023, many experts have made specific predictions.

According to economist Ngo Tri Long, the average CPI forecast in 2023 will be at 4 - 4.5% (from 3.15% in 2022) due to a lag of high imports and a larger money supply in late 2022 and next year, which is also the time to accept an increase in some state-managed commodities (basic salary, electricity, health care and education prices).

Vietnam's inflation in 2023 may exceed 4.5% because the delay of the recovery package, socio-economic development and inflation in important partner economies may remain high next year," said Mr Ngo Tri Long. However, this expert said that if the Government is still determined to control the inflation in 2030 to create a premise for the 2021-2025 period, the inflation will be expected to be at 4%.

According to Mr Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance, the inflation in Vietnam will tend to decrease gradually after the peak in January 2023 thanks to the prudent monetary policy of the State Bank of Vietnam in 2022, as well as the risk of the world economy falling into recession. The Inflationary pressure in 2023 may come from the State's adjustment of health, education services and electricity prices. Even so, if the price adjustment is made in the second half of 2023 with a low adjustment, the inflation control target of 4.5%, or even below 4%, is feasible.