Vietnam faces high risk of inflation next year: governor

By Minh Son November 12, 2021 | 04:00 am PT

An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy

Vietnam faces a risk of high inflation next year as commodity prices rise as global economies recover from Covid, the country’s governor said.

It is possible to keep inflation under 4 percent this year, but there are risks of high inflation next year, as some countries have seen record-high inflation as the prices of some commodities like oil surge, Governor of the State Bank of Vietnam Nguyen Thi Hong told a National Assembly meeting Friday.

In the U.S., Consumer Price Index (CPI), which measures inflation, in October rose 6.2 percent year-on-year, the highest since 1990.

South Korea’s inflation also exceeded 3 percent for the first time since 2012.

"For economies with high trade openness like Vietnam, inflation risks are very high," Hong told lawmakers.

Another concern is rising bad debt among banks, which have urged them to use their own resources to deal with the issue.

"Dwindling resources will affect the security of the system," she said, adding Vietnam should avoid repeating the same story as in 2008-2009 when inflation surged after an economic crisis.

The SBV has cut its rates on three occasions this year by a total 1.5-2 percent, considered large compared to regional countries, Hong said.

Banks have lowered their lending rates by 1.66 percentage points from pre-pandemic levels with a total value of around VND30 trillion ($1.32 billion).