What will Vietnam's economy be amid the 'storm' of commodity prices?
The world commodity market is fluctuating strongly, and supply chain disruption has led to concerns about inflation and economic growth.
Escalating tensions between Russia and Ukraine since February 24 has led to a series of sanctions imposed by the US and the EU targeting Russia, which has made a strong impact on the world commodity market, especially oil.
Seeing oil prices continuously setting new "peaks" in the context of the world economy, which has been heavily affected by the prolonged COVID-19 pandemic, combined with escalating geopolitical tensions has forced analysts to constantly adjust their forecasts of the oil market outlook.
The research team of Goldman Sachs Bank (USA) said the price of Brent oil could reach $175/barrel this year if two-thirds of Russia's seaborne oil exports are cut due to the tension in Ukraine, pushing the global economy to face one of its biggest energy supply "shocks" ever.
Analysts of JPMorgan Bank (USA) also estimated that crude oil price could skyrocket by nearly 70% from the level recorded at the end of last week (about $114/barrel) to $185/barrel by the end of this year if Russia's oil supply remains disrupted.
In the past week, the world oil price fluctuated strongly. On March 7, the world oil price suddenly spiked and touched $139/barrel, the highest in 14 years.
Meanwhile, in the domestic market, gasoline prices are also at a record high with VND 26,077 for a litter of E5 RON 92 gasoline and VND26,834 a liter for RON 95 gasoline, VND 18,468 for a litter of mazut oil and VND 19,978 VND per liter of kerosene, and VND 21,310/liter,kg of diesel.
In Vietnam, gasoline price increased continuously. Oil price also increased by about 60% since the beginning of 2022. The Ministry of Industry and Trade said that gasoline prices on March 11 could increase by VND5,000 - VND8,00/liter, kg depending on the type.
The high prices of gasoline and fuel has led to an increase in prices of basic goods, which raises concerns about global economic growth and inflation after a period of stagnation due to the COVID-19 pandemic.
Some experts said the escalation of commodity prices will affect Vietnam’s plan to control inflation under 4% this year.
However, experts said that inflation depends a lot on the tension between Russia and Ukraine. If both countries negotiate and come to an agreement, this tension will ease in the next few months. At that time, it is likely that Vietnam will control inflation back to a normal state.
As a large open economy, Vietnam will face a very high inflation rate, even above 5%, if Russia-Ukraine tension persists and lasts for the year. However, Vietnam's growth this year will be still better than 2021, experts said.
Vietnam's GDP growth depends on two resources: exports and the domestic market. Vietnam is recovering its export market very well. For the domestic market, Vietnam's credit growth spiked sharply and rebounded strongly in the first two months of the year.
It is expected that the Vietnamese economy will prosper with growth of the credit market and the Government’s economic support package of VND 350,000 billion.
The petrol price hike, which has led to an increase in nearly all goods and services, from food to medicine to fertilizer, has caused consumers constant anxiety.
The signs of “imported inflation” have appeared as prices of goods purchased from abroad in the first two months of 2022 rose to higher levels compared to the same period last year.