Inflation rate in 2019 to be lower: economists

Created 13 January 2019
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In the last two years, Vietnam was able to fulfill its economic development plans with a stable macroeconomy, high GDP growth rate, and stable inflation rate.
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Economists believe that the inflation rate in 2019 will be lower than 2018.

Nguyen Duc Do from the Finance & Economics Institute said the task of curbing the inflation rate at below 4 percent was supported by favorable conditions, including the downward trend of the crude oil price.

The oil price is one of the decisive factors influencing the inflation rate. At the National Assembly’s session in October, the government submitted a plan on keeping the inflation rate at ‘about 4 percent’ instead of ‘below 4 percent’ for 2019. 

The cautiousness of the government arose because of the warning that the oil price may hit the $100 per barrel threshold, and the anticipated increases in healthcare and education service fees.

The oil price is one of the decisive factors influencing the inflation rate. At the National Assembly’s session in October, the government submitted a plan on keeping the inflation rate at ‘about 4 percent’ instead of ‘below 4 percent’ for 2019. 

However, as the crude oil price dropped sharply from $70 to below $50 per barrel, the target of curbing the inflation rate at below 4 percent appeared feasible.

The pork price will not increase or may decrease, which means that the contribution of the product to inflation would be zero.

Regarding the dong/dollar exchange rate, Do said the dong depreciation is believed to be lower in 2019 than 2018. US economic growth is expected to slow down with the US FED’s interest rate plan. As a result, the demand for the US dollar will no longer be strong.

Meanwhile, the US-China trade war is predicted to cool down as both powerful economies expect an economic growth slowdown next year. This will make the Chinese yuan value more stable.

In one possible scenario considered by experts, the inflation rate would be 0.14 percent per month. If so, the inflation rate for the entire year would be a little higher than 2 percent. However, as the fees of some kinds of services will be raised, Do believes the inflation rate would be around 3 percent.

Under another scenario, the oil price would continue decreasing and the dong would lose 1 percent of its value. In this case, the inflation rate in December 2019 would be 1 percent only and the average inflation rate in 2019 would be 2.5 percent.

Even if this scenario occurs, the inflation rate in 2019 will still be lower than the 3.54 percent in 2018.

Meanwhile, Ngo Tri Long, a price expert, thinks that it would be a challenge to curb the inflation rate because the higher fees of public services will put pressure on inflation. 

Long predicted a 4 percent inflation rate for 2019 and 2020.

Mai Chi


Source: - Bridge

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