HSBC lowers Vietnam inflation forecast 1
HSBC Bank has just released its macroeconomic outlook report for March 2014.
HSBC warns that domestic demand is weak.
The consumer price index in February decreased from 5.5% in January (based on the same period) to 4.6% – a low level in the past 5 years, despite the law of demand for food, transportation and goods.
Core inflation (excluding food and energy prices) over the same period last year cooled from 6.5% last month to 5.9% in February. `Weak February inflation index
This organization also forecasts that the price level will continue to be unfavorable if domestic demand continues to be low from March to June 2014.
Reduced domestic consumer demand also affects the manufacturing industry, leading to lower labor and operating capital productivity over a longer period of time, the bank assessed.
However, with low inflation, HSBC believes that the State Bank will have the opportunity to keep interest rates stable for longer.
In contrast to the domestic situation, export growth shows that foreign demand for goods produced in Vietnam continues to increase strongly.
If Vietnam joins TPP, it will be easier for Vietnam to access the US market and enjoy lower tax rates for exported products, workers will also have more jobs and domestic production will have the opportunity to advance.
Besides, commodity prices are also a problem for export turnover.
However, HSBC still maintains an optimistic view on Vietnam’s export situation, commenting that `Exports sail through big waves` and expect this indicator to grow by double digits in 2014, in the context of commodity demand.
