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Prices in 2007: up or down? (08/01)
06/08/2010 - 246 Lượt xem
At least 26 items will see the tax cut right from the beginning of 2007. In total, 1,812 categories of tax, amounting to 17% of the tariff, will be reduced by 44% compared to the currently applied levels. In addition, the trade liberalization will also help make goods supplies profuse, thus leading to price decreases.
However, other experts said that many factors that may lead to the price increases, are still hanging over the market. According to Associate Prof Nguyen Van Lich, Head of the Trade Institute, in 2007, the world will be in the final stage of the price increase tendency, beginning from 2004. The crude oil price will stay firm at high levels as currently, while the gold price is forecast to see further increases, reaching $700/oz level. Meanwhile, the prices of food and foodstuffs in dollars will decrease by 4.5% over 2006, while raw materials used in industries will see the slight decrease of 3.7% on average.
“It is not likely to see the prices decrease,” said Mr Lich. The Government has agreed to the plan on raising electricity prices and decided to reduce the power price subsidization. The Vietnam Coal and Mineral Group is attempting to raise the selling price by 20%.
Mr Phong also admitted to the factors that may lead to the price increase, saying that the reduced subsidization in power price will kick start the new price increase movement, the second one in the last 20 years of doi moi (the first one was seen in the late 1980s).
“The power price increases will lead to the new level of goods and services prices,” Mr Phong said. In addition, the decision to raise the salaries of State officials, which means a higher volume of cash will be put into circulation, will also create a new level of prices. It is expected that the consumer price index (CPI) in the first quarter of 2007 will rise 3-3.5%.
Hard pressure on monetary markets
Nguyen Duy Thien, Deputy Head of the General Policy Division under the Price Control Department, said that the total society’s investment capital will be 40% of GDP, which allows to ensure the GDP growth rate of 8,2-8.5% set by the National Assembly.
According to Nguyen Thi Thu, an economist, the cash to be put into circulation will be higher than in 2006 as there will be more expenses from the state budget. The spending on education, health care and security will be 14% higher, on investment and development 21.45%, which will lead to the 20.1% increase in state budget expenses.
“Once the cash in circulation is higher, it will put a hard pressure on the prices in the market,” said Ms Thu.
In the financial market, the greenback is forecast to see further devaluation against the yen and the euro. Meanwhile, the reminbi will revaluate against other currencies as the result of the pressure put by the EU and theUS
According to Mr Phong, there will be a factor that may have impact on the domestic market in 2007: the inflow of foreign direct investment (FDI) and foreign portfolio investment (FPI). As a short term capital, the sharp increase of FPI will put a hard pressure on the prices in the domestic market.
Meanwhile, Mr Lich said that the gold price increase tendency will have certain impact on the domestic gold price. He said that the gold price may reach VND13.5mil per tael.
Experts said that the devaluation of the dollar and the fact that key economies in the world maintain the high interest rate policy will not have much impact onVietnam Vietnam
(Source: TBKTSG)
However, other experts said that many factors that may lead to the price increases, are still hanging over the market. According to Associate Prof Nguyen Van Lich, Head of the Trade Institute, in 2007, the world will be in the final stage of the price increase tendency, beginning from 2004. The crude oil price will stay firm at high levels as currently, while the gold price is forecast to see further increases, reaching $700/oz level. Meanwhile, the prices of food and foodstuffs in dollars will decrease by 4.5% over 2006, while raw materials used in industries will see the slight decrease of 3.7% on average.
“It is not likely to see the prices decrease,” said Mr Lich. The Government has agreed to the plan on raising electricity prices and decided to reduce the power price subsidization. The Vietnam Coal and Mineral Group is attempting to raise the selling price by 20%.
Mr Phong also admitted to the factors that may lead to the price increase, saying that the reduced subsidization in power price will kick start the new price increase movement, the second one in the last 20 years of doi moi (the first one was seen in the late 1980s).
“The power price increases will lead to the new level of goods and services prices,” Mr Phong said. In addition, the decision to raise the salaries of State officials, which means a higher volume of cash will be put into circulation, will also create a new level of prices. It is expected that the consumer price index (CPI) in the first quarter of 2007 will rise 3-3.5%.
Hard pressure on monetary markets
Nguyen Duy Thien, Deputy Head of the General Policy Division under the Price Control Department, said that the total society’s investment capital will be 40% of GDP, which allows to ensure the GDP growth rate of 8,2-8.5% set by the National Assembly.
According to Nguyen Thi Thu, an economist, the cash to be put into circulation will be higher than in 2006 as there will be more expenses from the state budget. The spending on education, health care and security will be 14% higher, on investment and development 21.45%, which will lead to the 20.1% increase in state budget expenses.
“Once the cash in circulation is higher, it will put a hard pressure on the prices in the market,” said Ms Thu.
In the financial market, the greenback is forecast to see further devaluation against the yen and the euro. Meanwhile, the reminbi will revaluate against other currencies as the result of the pressure put by the EU and the
According to Mr Phong, there will be a factor that may have impact on the domestic market in 2007: the inflow of foreign direct investment (FDI) and foreign portfolio investment (FPI). As a short term capital, the sharp increase of FPI will put a hard pressure on the prices in the domestic market.
Meanwhile, Mr Lich said that the gold price increase tendency will have certain impact on the domestic gold price. He said that the gold price may reach VND13.5mil per tael.
Experts said that the devaluation of the dollar and the fact that key economies in the world maintain the high interest rate policy will not have much impact on
(Source: TBKTSG)
