VCBS: Inflation in May may decrease, interest rates will continue to be low

VCBS: Inflation in May may decrease, interest rates will continue to be low

“The epidemic has not completely ended, it is likely that consumer demand cannot recover strongly again,” Vietcombank Securities Company (VCBS) emphasized in its recently published analysis report.

VCBS’s expert group forecasts that May inflation could fall by 0.1% compared to April, respectively increasing by 2.62% compared to the same period last year due to consumption somewhat affected by the latest wave of epidemics occurring in Vietnam.

Previously, the consumer price index (CPI) in April decreased by 0.04% compared to March, corresponding to an increase of 1.27% compared to December 2020 and by 2.7% over the same period last year. On average, in the first 4 months of 2021, CPI increased by 0.89% over the same period last year, the lowest increase since 2016. Meanwhile, the basic inflation in 4 months increased by 0.74%.


Inflation is low so in April, interest rates mobilized and lending barely changed. At this stage, according to VCBS, the message of the State Bank continues to show consistency, strict control of credit flowing into business activities, real estate investment and the general orientation is to maintain low interest rates to support businesses in the context of the epidemic.

“Stable operating policy with little change in this period is considered a bright spot”, the group of experts acknowledged.

“Up to this point, the Covid-19 strains are a significant barrier to the ability to quickly reverse the epidemic despite ongoing vaccination efforts. As such, efforts to revive the cycle are still in progress. The economy will continue to face many difficulties.Accordingly, we maintain our forecast that monetary easing policies will continue to be maintained at least until 2022 for many major central banks when targeting The priority of this phase will still be to support the economy to recover from the epidemic, “said the VCBS report.

Regarding the pressure to raise interbank interest rates at the end of April, the securities company said that the above developments are only seasoned when the end of the month is usually the time when banks close figures and pressures are only recorded locally at some banks, without reflecting the entire banking system.

Moreover, in the context of concerns about disease developments, credit expectations and demands are unlikely to be boosted. In particular, investment capital flows continue to find an ideal location like Vietnam.


“We maintain our view that market factors will support interbank interest rates to be maintained at a low level,” said VCBS.

Regarding economic growth, the group of experts forecast that Vietnam’s GDP growth in the first 6 months of the year could reach 6.5 – 6.7%.

Previously, the General Statistics Office has just released an economic situation report in April 2021. In particular, the main highlight is import and export activities with high growth. Specifically, the growth rate of export activities is up to 23.2%. Meanwhile, the Industrial Production Index (IIP) in the first 4 months of the year achieved a growth rate of 10%, with the morning whore continuing to belong to the manufacturing industry. At the same time, the April PMI rose for the third month in a row to 54.7 points from the 53.6 point threshold recorded last month, showing that the manufacturing sector continued to recover amid a controlled Covid-19 epidemic in the past month.

Regarding the exchange rate, after Vietnam escaped from the list of currency manipulation of the US, VCBS said that with the room in terms of both resources and existing policies, the State Bank of Vietnam could achieve the target of exchange rate stabilization. Accordingly, this securities company maintains its forecast in 2021, the exchange rate will fluctuate around 0.5%.

Source: vietnamfinance.vn – Translated by fintel.vn

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