HSBC lowers Vietnam inflation prediction to 3.5 percent

By Bach Quang
Fri, June 17, 2022 | 6:08 pm GMT+7

HSBC has revised down its forecast on Vietnam’s inflation this year to 3.5% from the 3.7% it predicted in May due to stable domestic food prices.

The inflation risk in ASEAN countries has risen since the beginning of 2022, leading to a high rise in both core and headline inflation rates compared to the pre-pandemic period, according to the bank.

Inflation pressure in Singapore, Thailand and the Philippines becomes more intense, while it has been under control in Vietnam, Malaysia and Indonesia. But headline inflation is likely to increase strongly in the second group soon given rising energy prices, HSBC's report released Tuesday noted.

HSBC revised up its inflation forecast for Thailand, Singapore, Indonesia and the Philippines.

In April, Standard Chartered forecast Vietnam’s inflation in 2022 and 2023 at 4.2% and 5.5% respectively. Photo courtesy of Ministry of Industry and Trade.

In April, Standard Chartered forecast Vietnam’s inflation in 2022 and 2023 at 4.2% and 5.5% respectively. Photo courtesy of Ministry of Industry and Trade.

While the current inflation rate remains below the State Bank of Vietnam's (SBV) 4 percent target, HSBC expects persistent high energy prices will continue to push overall prices up.

It is likely that inflation will sometimes surpass the central bank’s target in the second half of 2022 but only temporarily. As a result, SBV might adjust interest rates by 50 basis points in the third quarter of 2022 before raising the rates three times, 25 basis points each time, in 2023, it added.

Nguyen Bich Lam, former head of the GSO, on May 12 said he expected Vietnam's inflation to be 4-4.5% in 2022, which could exceed 5% in 2023 in case high inflation rates persist in its key partner economies like the U.S., the EU, and South Korea.

In April, Standard Chartered forecast Vietnam’s inflation in 2022 and 2023 at 4.2% and 5.5% respectively, due to supply-side factors including rising commodity prices, especially given the current global geopolitical tension.

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