Government on high alert against inflation risk

Deputy Prime Minister Le Minh Khai has called for timely measures to ensure macro-economic stability and cope with inflation pressures.

Addressing a finance and banking conference Thursday, the Deputy PM said steps have to be taken to avoid economic shocks while maintaining normal activities in business circles and ensuring jobs and incomes.

The Ministry of Finance should be in a position to tighten inflation controls and counter economic shocks if and when needed. It should continue working out fiscal and tax solutions to minimize economic difficulties, Khai said.

Finance Minister Ho Duc Phot said the business sector and citizens were facing price increases and inflation pressures, therefore the ministry will prepare for inflation-control scenarios.

In their latest reports, the World Bank and International Monetary Fund expect Vietnam’s 2022 inflation to be contained at a maximum of 4%, which is the State Bank of Vietnam's target.

After the latest consultation with the Vietnamsese government, the IMF Executive Board said economic recovery was underway in Vietnam. Growth is expected to reach 6% in 2022 as activities are normalized and the Program for Recovery and Development (PRD) is implemented. However, recovery of the labor market is lagging and underemployment remains high, the board said.

Deputy PM Khai said at the conference that macroeconomic stability had been sustained in the first half of the year and inflation kept under control.

Vietnam's consumer price index (CPI) rose 2.96% in the second quarter and 2.44% in the first half year-on-year, relatively low compared to the same periods in pre-pandemic years.

As the increase in oil prices generated inflationary pressures, the National Assembly adopted on Wednesday the lowering of environmental tax on fuel from July 11 till the year-end.

The second tax cut of the year after the first one in April is expected to help the economy better navigate the increase in world oil prices.