Vietnam has pledged to continue its focus on controlling inflation as it bids to bring some stability to an economy that has seen its stock market fall by more than 20%, and its currency slump 6% against the US dollar, over the past three months.
Prime Minister Pham Minh Chinh admitted Vietnam’s economy faces fresh challenges on Saturday but vowed to be “vigilant” and said the government will “not panic”.
The Southeast Asian economy has rebounded from the Covid-19 pandemic but now faces weakening global demand and a strengthening dollar.
“It’s getting more difficult to manage the macro economy,” Chinh said. “We need to stay vigilant [against risks] but we won’t panic.”
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Vietnam’s gross domestic product is expected to grow 8% this year, faster than an expansion of 2.58% last year. The country targets to cap inflation at 4% this year.
Chinh said the country will continue to “pursue an active, prudent, flexible and sturdy monetary policy in harmony coordination with fiscal policy and other policies, without abrupt changes”.
“The bond and stock markets now bear risks after a period of strong growth, with businesses having high demand for capital for production while banks’ credit is tight,” Chinh told parliament, adding that the real estate market is facing liquidity problems.
Vietnam’s central bank held emergency meetings this week with commercial banks to discuss liquidity in the system, as lenders face pressure from tightening credit conditions and higher interest rates.
Chinh said the government will take measures to ensure that the financial and real estate markets operate in a more transparent and effective manner.
“The government will propose amendments to securities and enterprise laws and related regulations,” Chinh said.
Chinh said the authorities have been slow in responding to a fuel supply crunch that has left hundreds of petrol stations having shut or limited sales in recent weeks, citing financial difficulties and tight domestic supplies.
He said Vietnam will consider raising the national fuel storage capacity and domestic fuel production to avoid future fuel shortages.
- Reuters with additional editing by Sean O’Meara
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