Public investment deemed key driver for economic growth and inflation control
Public investment deemed key driver for economic growth and inflation control
Rebounds in retail and consumption services and in the disbursement of public investment are expected to put pressure on the country’s efforts to bring inflation under control this year.
The government last week assigned the Ministry of Planning and Investment to work with related agencies and localities to devise a resolution to start at the end of this month. The resolution will cover new solutions to support enterprises, stabilise the economy, and rein in inflation, which is forecast to bounce back in the months to come due to a series of factors, including rising demand and public investment.
According to the General Statistics Office, though the consumer price index in the first five months has been brought under control, at an on-year rate of 3.55 per cent, it may bounce back strongly in the coming months to come due to an expansion in travel, consumer spending on goods and services, and government efforts to boost public disbursement.
The total five-month retail and consumption revenue in the country reached $105.3 billion, up 12.6 per cent compared to the same period last year, when it increased 9.3 per cent on-year. This is the highest five-month climb in such revenue since 2015, and an increase of 28.3 per cent compared to the corresponding period in 2019 when the coronavirus had yet to appear.
Goods retail revenue in the first five months of 2023 sat at over $83 billion, up 10.7 per cent on-year, in which the price of many important groups of items also expanded, such as food at 14.6 per cent, garments at 11.1 per cent, home appliances 4.8 per cent, and travel 4.2 per cent.
The five-month revenues from travel services are estimated to be $483.3 million, up nearly 90 per cent on-year, thanks to a strong rebound in cultural and tourism activities nationwide. Many localities have reported a more than three-fold rise in revenues from these services, including Danang, Haiphong, and Hanoi.
According to the Asian Development Bank (ADB), in Vietnam, services are expected to expand by 8 per cent in 2023 on revived tourism and services. The bank also underscored the need for the government to control inflation, which may increase strongly in the months to come.
“Vietnam should continue to prioritise price stability because escalating geopolitical tensions and accelerated public spending may stoke inflation in 2023,” it said. “Inflation is forecast to increase slightly to 4.5 per cent in 2023. Finally, it is critical to accelerate the disbursement of $30 billion in public investment.”
According to the Vietnamese Ministry of Planning and Investment, public investment will be the key driver for economic recovery and growth in 2023.
A considerable amount of public investment is scheduled to be disbursed in 2023. The government is committed to disbursing $30 billion in the year, of which almost all capital has been allocated to ministries and provinces so far.
The government last week reported that in the first five months of this year, total disbursement of public investment nationwide hit $6.54 billion – up 35 per cent on-year, meaning a great deal of capital has been injected into the economy.
“Along with the continued implementation of the stimulus programme endorsed in January 2022, this spending will generate substantial multiplier effects, creating strong motivation for the whole economy,” the ADB said.
