Monday, 18 Dec 2017

Multiple benefits in economic management

Updated at Thursday, 30 Nov 2017, 17:31
The Hanoitimes - Despite the end of 2017 is approaching, the Consumer Price Index (CPI) in November increased slightly 0.13% compared to the previous month.
As such, the average CPI in the first 11 months has increased 3.61%, and played an important part in managing inflation. Statistics showed that, CPI in 11 months has been lower than the same period of last year, thanks to price in restaurants and food services, which contributed a main part in people’s expenditure decreased 1.57%; especially food with the highest spending percentage (22.6%) in 11 months reduced 3.44%, while in last year this number had increased 3.46%. Some other goods have a lower growth rate, such as beverage and cigarettes, clothes, footwear, home appliances, entertainment and traveling. 

Despite the CPI in 11 months is higher than the same period of last year, but due to the decreasing trend from previous months, in overall the growth rate in 11 months is quite low and a positive sign to ensure the CPI growth rate for 2017 within 4%. 

There are several reasons for this result, the first and foremost factor is the monetary policy. Despite the high credit growth since the beginning of the year, a high amount of VND has been bumped into the economy to buy USD (approx. 7 billion USD), but the core inflation rate (excluding food items; energy products and commodities under the State management including medical and education services) in 11 months has been lower than the same period of last year. In other word of saying, the pressure from monetary policies on CPI has been insignificant. 

The second factor is the impact of exchange rate. As the exchange rate between VND and USD after 11 months has reduced in average 0.07% in 11 months which is lower than the last year (an increase of 1.53% compared to 2.36%), which showed the rate between VND and USD is stable. 

Another important factor of inflation is the relation between supply and demand. The total supply (the growth rate of GDP) in on a growing trend through each quarter; in which the growth rate of total demand (including investment fund and consumption) despite growing, but still lower than total supply. 

Moreover, the productivity has been on positive note, which is higher than previous year (6% compared to 5.3%). FDI in the first 10 months also reached 84.6% of the plan, up 5% compared to the same period of last year. From now on until the end of 2017, FDI is expected to be continue with its growing trend, thanks to favorable conditions from the economy, such as the improving business environment. Vietnam has been integrated extensively in the world economy, with many important free trade agreements signed and became effective, as well as the positive opinions from organizations and foreign investors with regard to the Vietnam’s potential for development. The growing trend of FDI is expected to be the driving force for the improvement of export in 2017. Total investment for development in 2017 is expected to increase up to 33.4% of GDP, higher than the original plan and up 12.6% compared to 2016. Increase in consumption is also expected to be positive in the remaining month of 2017.
Nguyen Tung
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