Vietnam, Asia’s growth star whose economy surpassed all expectations in the fourth quarter last year, could face price pressures and challenges to Vietnamese Prime Minister Pham Minh Chinh’s 8 percent expansion target due to the policies of US president-elect Donald Trump.
Vietnamese officials, bracing for a possible new era of tariffs during Trump’s second term, are anticipating possible disruptions to global markets, Nguyen Thu Oanh, head of the price statistics department for the Vietnamese General Statistics Office, said at a news conference in Hanoi yesterday.
“Increasing protectionism and trade barriers will worsen trade tensions and disrupt the global supply chain,” she said. “These can fuel inflationary pressure and, at the same time, slow down the economic growth rate, as well as causing increases in the unemployment rate.”
Photo: EPA-EFE
The prime minister is pushing to expand the economy by at least 8 percent this year, although the official target set by parliament is 6.5 percent to 7 percent.
The nation’s GDP rose 7.55 percent year-on-year in the fourth quarter last year, the statistics office said in a statement. That was higher than all eight estimates in a Bloomberg News survey and topped 7.4 percent growth in the third quarter last year.
The full-year expansion of 7.09 percent surpassed the official target of up to 6.5 percent and the 6.7 percent median estimate of analysts in a separate Bloomberg survey.
The Vietnamese economy steadily recovered last year as global demand for its products picked up. Exports gained for a 10th straight month last month, growing 12.8 percent year-on-year, the statistics office said.
Growth in consumer prices remains manageable, rising at 2.94 percent last month, it said.
Double-digit growth in overseas sales, along with resilient foreign investments, helped support manufacturing activity, while strong retail sales in the fourth quarter last year revealed increasing domestic consumer spending, the office said.
However, Vietnam’s reliance on global markets could weigh on its economy this year, as local manufacturers could see an increase in costs of imported materials, creating inflationary pressure, Oanh said.
Rising prices of imports could affect the Vietnamese dong-US dollar exchange rate, further adding to cost increases, she said.
The government would work to control inflation through price adjustments on services and goods produced by state companies, such as electricity, medical services and education, she added.
Hanoi can also rely on previous tax breaks, reductions in lending costs, boosting public investments and pushing for strong credit growth to counter global headwinds, while being mindful not to put upward pressure on prices of consumer goods, Oanh said.
Vietnam expects foreign investment to keep flowing into the nation, Vietnamese General Statistics Office head Nguyen Thi Huong said at the news conference.
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