VGP – Viet Nam’s economy is benefiting from cheap oil price as disappearing inflation boosts domestic demand, Bloomberg said.
The news agency recently published an article saying that the impact of a weakened currency following China’s yuan devaluation is less clear.
Inflation dwindled to zero this month for the first-time ever, Nguyen Bich Lam, head of the General Statistics Office, said Thursday.
Price gains have averaged less than 1% this year, compared with a five-year average of more than 9% through 2014.
The number of new businesses rose 29% to 68,347 in Jan.-Sept.The ADB raised its 2015 growth forecast for Viet Nam to 6.5%and 6.6 % for 2016, saying private consumption is benefiting from low inflation, improved consumer confidence and growth of non-farm wage employment.
ANZ-Roy Morgan Viet Nam Consumer Confidence Index advanced to 135.3 this month.
The outlook for inflation is complicated by a weakening currency, which could push up import costs. While exports rose 9.6% in the nine months through September from a year earlier, imports surged 15.9%, the Ministry of Planning and Investment said.
However, Bloomberg also reported that prolonged weakness in price gains may also be a danger sign for consumption. The weak inflation in September was linked to lower electricity costs and two gasoline price cuts in August and September, which led to lower transportation prices, according to the General Statistics Office.
Low inflation has an added benefit to the economy. Vietnam’s central bank has room for monetary easing and to maintain an accommodative monetary stance, the ADB said this week. The country’s growth is expected to accelerate through the second half, underpinned by rising private consumption, export-oriented manufacturing, and FDI, it said./.
By Khanh Phuong