HSBC lowers Vietnam’s inflation forecast to 3.5 percent
HSBC has lowered its forecast on Vietnam’s inflation rate in 2022 to 3.5 percent from its earlier prediction of 3.7 percent due to the stable domestic food price, which is expected to help curb the country’s headline inflation, according to a report released by the bank on June 14.
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| HSBC lowered Vietnam’s inflation forecast to 3.5 percent. Illustrative image. (Photo: VNA) |
The bank explained that the inflation risk in ASEAN countries has increased since the beginning of 2022, leading to a high rise in both core and headline inflation rates compared to the period before COVID-19 broke out.
However, the impacts are different on each country, and inflation pressure in Singapore, Thailand and the Philippines has become heavier, while in Vietnam, Malaysia and Indonesia, inflation has been under good control, according to the report.
But headline inflation is likely to increase sharply in the second group soon, especially in the context of rising energy prices, it predicted, adding that although the world oil price has "cooled down" compared to the peak in March, it is still at a high level, while the price of natural gas continues to increase gradually.
In Vietnam, energy price inflation has also persisted for long. Transport prices hit a record high, surpassing food inflation to become the main driver of Vietnam's headline inflation, it said. Despite rising energy prices, food inflation has remained moderate, helping control the overall increase in headline inflation so far, it added.
In the report, HSBC also increased its inflation forecast for Thailand, Singapore, Indonesia and the Philippines.
After considering both inflation and growth, HSBC also revised its forecast for Vietnam's operating interest rates in 2022.
While the current inflation rate remains below the 4 percent target, the bank expects persistent high energy prices will continue to push overall prices up. It is likely that inflation will sometimes surpass the State Bank of Vietnam’s ceiling rate of 4 percent in the second half of 2022 but only temporarily, said the report. That situation will likely cause the bank to adjust interest rates by 50 basis points in the third quarter of 2022 before raising the rates three times, 25 basis points each time in 2023, the report underlined.
(Source: VNA)
