Hanoi (VNS/VNA) - In a recent report, HSBC adjusted its predictionfor Vietnam's inflation this year from 2.7 percent to 3 percent, a slightincrease but with negligible risk as the economy has shown signs of a strongrebound in the making. 

While thenumber of cases has continued to climb since before Tet (LunarNew Year), the Government has so far refused to reimpose stringent social andmobility restrictions.   

"Policymakershave made clear that they intend to stick with the new strategy of livingtogether with the virus thanks to the success of the country's mass vaccinationprogramme. This has resulted in higher confidence among consumers and morerobust economical activities in the domestic market," said the report. 

Retail hasrecorded a positive 1.3 percent in growth year-on-year in January alone afterlosing nearly 4 percent in 2021. While the 1.3 percent figure may not appear asimpressive, it should be taken into consideration that January 2021's numberwas especially high because 2021's Tet fellin early February, giving retail a huge demand boost during the entire month.

Firms havebeen able to address labour shortage issues with most vacant positions filledafter the holidays, setting the stage for an economic recovery. In addition,the country's manufacturing PMI last month recorded the largest gain in thelast nine months, showing a fast rebound of the industrial sector with a vastmajority of indicators pointing to a strong possibility of achievingpre-pandemic industrial production levels. Despite a slight uptick ininflation, the price for foodstuffs remained stable due to weak demand,said the report. 

"A smallincrease in inflation (from 2.7 percent to 3 percent) for 2022 in our forecastindicates negligible risk for the State Bank of Vietnam as it remainedsignificantly lower than the government's inflation target (4 percent),"said HSBC researchers. 

"This isespecially true while put in comparison with inflation forecasts for ASEANeconomies such as Thailand and Singapore, where higher inflation has started toraise concerns.", they said. 

Nguyen BaMinh, head of the Institute of Economics - Finance under the Academy of Financein Hanoi, said inflationary pressure is likely to stay moderate throughout 2022as the global economy slowly recovers while dealing with a disrupted supplychain as a result of the pandemic. 

However,checking the spread of the virus still remains a top priority for theGovernment to ensure economic recovery, a stable macroeconomic environment andeffective inflation control. 

TheGovernment, in the meantime, must tighten control over prices of keycommodities to support the business sector as a whole as well as consumers,especially petro products. 

A Viet DragonSecurities' report said the biggest threat is likely inflation due to increasesin the prices of imports as the economy continues to rely heavily on imports ofraw materials, up to 37 percent of overall material cost according to theMinistry of Planning and Investment./.