Vietnam PM Assures Stability Amidst New Economic Challenges

From the weakening dollar to a drop in stock prices, Vietnam Prime Minister Pham Minh Chinh admitted it’s “getting more difficult to manage the macroeconomy.” Nevertheless, the Vietnamese leader told local media that the country would continue to stick to its target of keeping inflation under control while ensuring macroeconomic stability.

In simpler terms, inflation is the term used to describe the rate at which prices increase. And it’s in the headlines because it has been rising rapidly for several years across many countries, including Vietnam. Rising prices mean your money buys you less in the future than it does today. And that means we all have less to spend.

The primary way to control it is by using central bank interest rates. However, things such as global energy costs are hard to influence.

Global inflation will peak at 9.5% this year, up from 4.7% in 2021, but remain high at 6.5% in 2023 before falling to 4.1% in 2024, the International Monetary Fund predicts.

In Vietnam, the stock market has fallen by over 20%, while the value of VND has so far lost 6% against the USD over the past three months. And while the fight against the COVID-19 pandemic seemed to have been won, economic issues continue to dare the strength of Vietnam.

PM Chinh said despite what the numbers dictate, “we need to stay vigilant (against risks), but we won’t get panic.” He added that they will keep "pursuing an active, prudent, flexible and sturdy monetary policy in harmony coordination with fiscal policy and other policies, without abrupt changes.”

While banks are keeping credit conditions tight, the demands from businesses for capital just skyrocketed, and the bond and stock markets are now at risk after a period of robust growth.

The Vietnamese leader also revealed the real estate market is facing liquidity problems. According to him, the government will take measures to ensure that the financial and real estate markets operate in a more transparent and effective manner.

Over the past week, Vietnam's central bank held emergency meetings with commercial banks to discuss liquidity in the system as lenders face pressure from tightening credit conditions and higher interest rates.

"The government will propose amendments to securities and enterprise laws and related regulations," the PM said.

PM Chinh also said the authorities have been slow in responding to a fuel supply crunch that has left hundreds of petrol stations having shut or limited sales in recent weeks, citing financial difficulties and tight domestic supplies.

Following the statement of Nguyen Hong Dien, Minister of Trade and Industry, that the country’s fuel stocks of 3 million cubic meters are enough to meet the country’s demand until the end of November, the PM said they will still consider raising the national fuel storage capacity and domestic fuel production to avoid future fuel shortages.