FACTORS

1. Inflation due to the impact of the global epidemic:

- The inflation in 2020 is directly affected by the COVID-19 epidemic. The monthly
increase in the consumer price index (CPI) starting from October 2019 (the risk
of high inflation returning) only lasts until October. January 2020, mainly due to
increased demand during Tet holiday, which was stopped from February 2020 at
the same time as the first wave of the Covid-19 epidemic broke out in Vietnam.
The consumer market almost froze, causing monthly CPI to decline for 4
consecutive months (from February to May 2020).
- However, the outbreak of the second Covid wave caused the market to cool
down once again, accordingly, the monthly CPI remained almost unchanged
from August 2020 until the end of the year. by way of explanation, prices have
been frozen throughout 2020 except for the spike in June 2020, which is mainly
attributed to three consecutive increases in gasoline prices after a long series of
declines since Tet holiday and meat prices continued to increase in the first days
of June.
2. Inflation due to the impact of the Russia – Ukraine war:
- Negative consequences from the Russia - Ukraine war, along with rising energy
prices, food prices and many other commodities, have caused a significant
impact on the world market in general and the Vietnamese market in particular.
- In the gloomy global economic picture covered by the risk of recession and
stagnant inflation, Vietnam's economy stands out as a bright spot. However, the
world situation is forecast to continue to evolve rapidly, complicatedly, and
unpredictablely, with inflation in many countries and regions increasing sharply
and at high levels. Increasing interest rates and narrowing monetary and fiscal
policies lead to reduced growth, increased risk of recession, and potential
financial, monetary, and public debt risks. The world economy is falling into a
state of stagflation, along with the pressure to increase interest rates in major
economies, which has and will have a significant impact on Vietnam. Vietnam's
economy depends heavily on imported raw materials. The increase in energy
and raw material prices and the increase in the value of the USD have a
significant impact on production stability and increase the impact of cost-push
inflation due to imported inflation. This creates a risk of import inflation due to the
ongoing energy crisis and food price crisis in the world.
- Rising world inflation and the trend of monetary tightening in major economies,
especially the United States, have increased pressure on domestic interest rates.
Accordingly, the State Bank has adjusted to increase the operating interest rate
twice in a month. The deposit interest rates of many banks have increased again,
increasing pressure on output interest rates, causing many banks to Update the
new loan interest rate table with an increase of 0.5 - 1.2% compared to the
beginning of October 2022. Increased lending interest rates affect the production
and business of businesses that are in the process of recovery, thereby affecting
the overall growth prospects of the economy.
- Prolonged inflationary pressures and the prospect of stronger monetary
tightening, especially in the United States and developed economies, could lead
to volatility in global financial markets, slowing Vietnamese economic growth,
especially at a time when economic activities are slowing down. Rising USD
interest rates also make investors afraid of risks, shifting capital flows from
emerging markets to investing in the US market and some other developed
markets to avoid risks and enjoy high yield profits.