Vietnam minister warns of higher inflation, continued exchange rate pressures

Vietnam’s economy is facing increasing challenges to growth, inflation control, and macroeconomic stability, said Minister of Planning and Investment Nguyen Chi Dung.

Addressing the regular government meeting on Saturday, Dung noted that inflation could rise due to the volatility of global supply and prices, coupled with high demand for electricity and passenger transport.

The foreign exchange rate is expected to face continued pressure from external factors, he added.

It is critically important to stay abreast of inflation developments in order to take price management solutions in a cautious, appropriate, timely, and effective manner, Dung stated.

He affirmed the government’s steadfast stance on pursuing economic growth alongside maintaining macroeconomic stability and controlling inflation.

Speaking of tasks for June and the third quarter of this year, the minister proposed the government finalize work on the adoption of a new salary policy effective from July 1.

He also urged the issuance of guidance documents for the implementation of the laws on land, real estate business, and housing, which are expected to take effect on August 1, pending National Assembly approval.

Additionally, the government should continue to strongly promote and renew growth drivers in investment, consumption, and export. It also needs to capitalize on new opportunities in digital transformation and the green transition, closely monitor inflation, and ensure macroeconomic stability as well as the major balances of the economy.

The government should focus on perfecting institutions and laws in line with decentralization, enhancing adherence of administrative disciplines, addressing evasion of responsibility, and effectively upholding rules to protect officials who "dare to think and dare to do".

Vietnam’s consumer price index (CPI), a gauge of inflation, inched up 0.05% from April to May, according to the General Statistics Office (GSO). The May index went up 1.24% from December 2023 and 4.44% from May 2023. From January-May 2024, the CPI increased 4.03% year-on-year, while core inflation rose 2.78%.

The Vietnam dong has depreciated around 5% against the greenback so far this year due to the U.S. Fed’s postponement of rate cuts, a strong increase in Vietnam’s imports, and the wide USD-VND interest rate gap.

In the first five months of 2024, Vietnam’s trade value jumped 16.6% year-on-year, while its exports and imports hiked 15.2% and 18.2% year-on-year, respectively. The country posted an estimated trade surplus of $8.01 billion.

Vietnam recorded $11 billion in registered foreign investment in the five-month period, up 2% year-on-year.