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Economists call for flexible finance policies
Economic analysts agree that the time is right for the Government to settle problems caused by the economic crisis and create a driving force for the national economy to develop in the new period through new financial policies.
“The macroeconomic data from the first six months of 2010 showed that Vietnam’s economy has not only escaped from recession, but also regained the growth it once obtained before the global economic crisis took place,” stated Vu Nhu Thang, Director of the Strategy and Finance Policies Department under the Ministry of Finance.
In the first half of the year, exports, which make up 80 percent of GDP, had increased far beyond expectations, by 24.46 percent, after a drop of 9.41 percent in the same period of 2009.
After witnessing the active growth of the national economy in first half of 2010, the International Monetary Fund (IMF) predicted that Vietnam’s GDP would grow by six percent, while inflation would hover around 12 percent. The Asian Development Bank (ADB) predicted that GDP growth would be 6.5 percent in 2010, while inflation would stand at 10 percent at maximum.
The World Bank (WB) offered a brighter forecast, claiming that the GDP growth rate would be 6.5 percent, and the inflation rate would be 9 percent at maximum.
“Vietnam’s economy has escaped from recession, but it still has to cope with a lot of difficulties. Therefore, it is understandable that finance organization give different forecasts,” Thang explained.
Regarding these difficulties, Thang went on to observe that GDP growth was lower than the fourth quarter of 2009 (6.16 percent vs. 7.68 percent), high inflation is likely to return, the trade deficit continues to stay at a high level, while credit growth was low at 10.52 percent in contrast to the 37.73 percent of 2009.
The Ministry of Finance, after considering the real situation, predicted that in the third quarter, GDP would grow by 6.78 percent and by 7.21 percent in the fourth quarter. Thus, GDP growth for all of 2010 would be 6.31 percent.
According to the ministry, the third quarter inflation rate would be 5.79 percent, after climbing to 4.78 percent in the first half of 201, reaching 7.4 percent by the end of the year.
As such, the Ministry of Finance forecast is not much different than the Government’s stated goals of GDP growth rate at 6.5 percent and maintaining an inflation rate of less than eight percent.
The world’s economy now confronts a public debt crisis. “The debt crisis is as dangerous as the finance-monetary crisis. Vietnam is an economy with a high level of openness, therefore, the world’s debt crisis will have a big impact. The Ministry of Finance needs to reconsider its predictions to set reasonable finance policies for the post-crisis period,” maintained Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM).
Thanh added that, with the Chinese yuan appreciation, China goods are becoming more expensive, which is an opportunity for Vietnam to boost exports. However, the State Bank of Vietnam (SBV) policy on stabilizing the exchange rate prevents taking full advantage of yuan appreciation.
The economist advised rethinking the demand stimulus package. He noted that the package “which is worth seven billion dollars, or one billion dollars less than the initially planned volume, helped make the 2009 GDP increase by 1.3-1.4 percent.. It is necessary to calculate what it will bring in the time to come.”
vietnamnet, Dau tu
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