Hanoi (VNA) – Vietnam’s economy has made good recovery since thebeginning of this year; however, inflation risks could weight on the country’sgrowth outlook, according to experts.

With the Government’s effective and flexible policies, the inflation rate hasbeen curbed in line with the target of under 4.5% set by the National Assembly.The average consumer price index (CPI) during January-September rose 3.16% ascompared to the same time last year.

According to the General Statistics Office (GSO), there are several robusteconomic signs, holding out much hope of a strong recovery that couldbring the economy into a new growth period in the end of this year.

A recent survey showed that 30.1% of processing and manufacturing firms saidtheir business in Quarter 3 is much better than Quarter 2, and 39.1% of theenterprises expected a rosier business situation in Quarter 4.

Economists described strong purchasing power as a locomotive for economicexpansion in the three quarters, with total revenue from retail sales andservices estimated at more than 4.5 quadrillion VND (184.5 billion USD), up9.7% year-on-year.

The increase in the revenue was spurred by a rise in CPI in recent months, which was up from0.45% in July to 0.88% in August and 1.08% in September.

The GSO said that increases in tuition fees, petrol prices and housing rent werethe main reasons that pushed the September’s CPI growth to the highest level in thepast five years.

According to Nguyen Thu Oanh, head of the GSO’s Price Statistics Department, thereare several factors that could pose risks to the CPI in the remainders of thisyear, including increasing food prices, a 20% surge in base salary from July 1,and high purchasing demand for festivals and Tet holiday.

An expansion in production costs of agro-forestry-fishery products (3.26%), andservices (7.34%) during January - September may accelerate the CPI in Quarter 4if no effective control measures are put in place, she said, adding augmentationof the world’s oil prices driven by Saudi Arabia and Russia’s oil cuts isanother risk for the CPI.

Meanwhile, former GSO Director General Nguyen Bich Lam said that the US FederalReserve could raise interest rates in pursuit of bringing inflation rate to thecountry’s set target, creating pressure on the VND-USD exchange rate.

He pointed to a surge in power prices as another factor that affect the marketprices toward the end of 2023 and even in the beginning of 2024.

With a view to putting inflation rate in the remaining three months of this yearunder control, Lam suggested competent sides continue implementing measures to balancesupply and demand, especially in the field of food which has an important roleto play in ensuring social welfare.

The Ministry of Agriculture and Rural Development should outline measures to curbthe prices of animal feed, he said, explaining an increase in the prices couldbring difficulties for the livestock production and businesses and farmers,thus affecting food supply.

He recommended appropriate use of the price stabilisation fund to restrain increasesin petrol prices, while suggesting the Government give subsidy to sectorswhere petrol prices account for a large proportion in the production costs.   

Furthermore, the Government should pay due regard to the communications work to prevent inflation expectations at a time when the country and the worldexperience unfavourable economic developments./.