WB warns of inflation risk

Vietnam’s economy is gaining momentum but there are still many issues to monitor, especially regarding inflation and maintaining strong export growth, according to a recent World Bank (WB) report.

Both core inflation and food prices continue to inch upwards, indicating a need to keep a close watch on developments. If inflation persists over the medium term, the economy should be allowed to adjust to higher prices, with authorities playing the role of providing investment incentives to enhance productivity and supply.

The WB made several assessments of Vietnam’s economic situation in recent times. While exports have grown rapidly, import growth flatlined, reflecting supply chain disruptions in Vietnam due to China’s “Zero Covid-19” policy. Disbursed FDI, meanwhile, grew strongly while registered FDI fell for a third consecutive month. Credit growth rose from 15.9 per cent year-on-year in March to 16.4 per cent in April, while interest rates are falling, which shows an abundance of liquidity. The State budget posted a surplus for the fourth consecutive month, coming in at $2.9 billion in April. The total volume of bonds issued in the first four months, including government-guaranteed bonds, represented just 11.5 per cent of the annual plan; much lower than the 18.7 per cent posted in the same period last year.