The Ministry of Planning and Investment forecasts a record high CPI for February at over 3%. Curbing inflation is now the hottest topic in all economic policy discussions and the Ministry of Finance unexpectedly released the petrol price decision, green lighting the increase.

According to Le Dang Doanh, Senior Economist, many foreign experts think Vietnam’s economic growth rate will not exceed 8%; and may even fall below this because of continuing price increases.

“I think the Government should adjust the targeted economic growth goal. We should think of a more suitable level that takes into account current conditions. We should focus on the quality of growth rather than the quantity,” Doanh said.

Doanh added that businesses have no other choice than economizing fuel in their production, if not, Vietnam-made products’ competitiveness will be lessened.

Vietnam’ exports now equal 62% of GDP, and imports, 74% of GDP. If Vietnamese enterprises do not try to lower costs, their exports will not be purchased, and therefore, Vietnam’s export-oriented economy will suffer.

Sharing the same view, Vo Tri Thanh, Director of the Department for Trade Policies and International Integration Studies under the Central Institute for Economic Management, said that it is necessary to make an exchange. He prefers a lower GDP growth rate if it means a stable economy rather than a higher GDP growth rate and high inflation.

Regarding the decision to allow distributors to set petrol prices, Thanh said that Vietnam should have been better prepared for this.

Dr Nguyen Quang A, Head of the private Institute for Development Studies (IDS), said that people aren’t as concerned with the GDP growth rate. What they care about most is their income and commodities prices. People do not remember GDP growth rate figures, they just remember that they now have to spend VND1,500 more to buy a liter of petrol.

“I want to stress that economic growth is being trade for quality of people’s lives,” A said.

However, A believes that the petrol price increase is like a ‘double edge knife’. On one hand, this will make the production cost higher, while on the other hand, this will force businesses to economize expenses.

Meanwhile, in an interview with Dau tu newspaper, Minister of Finance Vu Van Ninh said: “In the current period, our most important target is achieving a high economic growth rate. The actions by the State Bank recently to tighten monetary policy aim to curb inflation. However, while we strive to tighten the monetary policy, we still have to ensure a continuing rise of the economic growth rate”.
Source: Dau tu, NTNN