Growth drivers will continue to come from strong industries such as agriculture, industry, especially processing and manufacturing. Photo: Thu Diu

Therefore, reaching the growth target of 6.5% is assessed as a big challenge.

Two scenarios

The first three months of Vietnam's socio-economic year took place in the context that the world economy was maintaining its recovery momentum, production activities were promoted, and the global supply chain was gradually opened.

However, the conflict between Russia and Ukraine has created a massive humanitarian crisis that affects millions of people and is a shock to global growth. The high price of commodities on the world market, especially the price of crude oil, natural gas and liquefied natural gas, increased the most since 2011, putting great pressure on global inflation. Recent forecasts for global growth in 2022 by international organizations are all lower than previous forecasts.

Domestically, thanks to the quick and effective implementation of support packages for socio-economic recovery and growth in the first three months of 2022, many positive results have been achieved, most industries and fields tend to recover and grow again.

However, entering the second quarter, Vietnam's economy and society will face many difficulties and challenges, especially since Vietnam's economy has a large openness, so it will be affected in many ways by the political situation.

The world economy is recovering slowly, the prices of essential goods are high, the world's aggregate demand is high, but the supply chain is facing many difficulties, there is a risk of high inflation globally.

Although the Covid-19 pandemic has been basically controlled in Vietnam, there are still complicated developments in the world. Therefore, Vietnam's economy in 2022 continues to face many difficulties, reaching the target of 6.5% growth is a big challenge, requiring the joint efforts and consensus of the Government, businesses and people.

Assessing the growth rate in the coming quarters, Le Trung Hieu, Director of the Department of National Accounts System (General Statistics Office), said that the driving force for growth will continue to come from sectors such as agriculture, industry, especially the processing and manufacturing industry due to the recovery of world demand and markets.

The wholesale and retail activities of food and beverage and entertainment services have gradually increased, especially when Vietnam has had a policy of reopening tourism.

This will help the third and fourth quarters of this year see a high growth rate, regaining the same growth momentum as before. In addition, the implementation of support and recovery packages for socio-economic development under Resolution No. 11/NQ-CP will help investment and domestic consumption recover, workers' incomes will increase (leading to increased consumer spending) and thereby promote production development.

According to Le Trung Hieu, based on the growth in the first quarter as above, in order to achieve the growth target of 6-6.5%, the General Statistics Office proposed two growth scenarios for the remaining quarters of the year.

Accordingly, the GDP growth rate of the quarters will change but not much. In the low scenario, with the assumption that the Russia-Ukraine conflict is still tense but ends in the first six months of the year, the Covid-19 pandemic continues to develop complicatedly with new strains but is basically controlled and Vietnam is completely under control.

In order to achieve universalization of the 3rd dose of the vaccine and maintain economic activities, the growth rate in the second quarter will be about 5.5% (0.1% higher than Resolution No. 01/NQ-CP); in the third quarter about 7.5% (still unchanged according to Resolution No. 01/NQ-CP) and in the fourth quarter increased by 6.1% (0.1% lower than Resolution No. 01/NQ-CP). Growth for the whole year is estimated at 6%.

“With the high scenario, assuming the Russia-Ukraine conflict cools down in April, the Covid-19 pandemic is under control, the new strain has a milder effect, and Vietnam completes the universalization of the third dose of vaccine. If economic activity is expanded, Q2 growth will reach 6.1% (0.2% higher than Resolution No. 01/NQ-CP); the 3rd and 4th quarters remained the same according to Resolution No. 01/NQ-CP, the whole year growth rate reached 6.5% as in the initial scenario,” added Le Trung Hieu.

Inflation is still an unpredictable variable

Although the economy has many bright spots, inflation pressure in the remaining months is still an existential risk threatening the growth and recovery of Vietnam's economy. Data from the General Statistics Office show that petrol is the main factor increasing the consumer price index (CPI) in the first three months of the year. On average, in the first quarter, domestic gasoline prices increased by 48.81% over the same period last year. The impact of gasoline prices made CPI increase by 1.76%.

Commenting on inflation pressure in the next quarters, Assoc. Dinh Trong Thinh forecasts that this year's inflation will double last year. The cause of this year's high inflation has been analyzed by many economic experts, such as the consequences of the Russia-Ukraine conflict leading to disruptions in the global supply chain of raw materials and materials that are inputs to domestic production activities. Inflation of major economies has reached the highest level in many decades, Vietnam imports raw materials, fuels, equipment and machinery, which means imports inflation.

Also according to Assoc. Dinh Trong Thinh, although the world economy has only been forecasted by international financial institutions to reduce its growth rate, it is still on a strong recovery path, causing demand to increase. The price of petrol has been increasing very strongly, but it is still an unknown, it all depends on the Russia-Ukraine conflict and the economic measures taken by Western countries towards the Russian Federation.

In the country, the Wage Council has not yet proposed to the Prime Minister whether or not to raise the regional minimum wage or by how much. But under the pressure of labor shortage, in order to attract and retain workers, enterprises are forced to raise wages, allowances, bonuses, remuneration regimes and incomes for employees, increasing costs and increasing prices, putting pressure on inflation.

Referring to solutions to control inflation, economic expert Nguyen Bich Lam said the first factor is supply control, because inflation pressure this year comes from the shortage of supply to meet the total demand for inflation, especially the supply of petroleum.

According to calculations by economic experts, if gasoline increases by 10%, inflation will increase by 0.36%, while from the beginning of the year until now, gasoline has increased by 60%, showing great pressure. "Therefore, first of all, it is necessary to control the supply of raw materials, especially gasoline, which is an important factor," said Lam.

The next solution is not to break the supply chain. For the domestic market, there must be solutions to ensure the supply of materials between regions and localities. In particular, not breaking the supply chain between the world and Vietnam, this is a huge challenge.

Finally, he said that it is necessary to operate financial and monetary policies in a flexible, rhythmic and effective manner in order to ensure macroeconomic stability and contribute to curbing inflation.