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CIEM’s 5% GDP growth rate – an impossible dream?
The Central Institute for Economic Management (CIEM) is going to release a report, providing three scenarios for economic growth in 2009. Vo Tri Thanh, Head of the International Economic Integration Studies under CIEM, has provided some information which will be available in the report.
Thanh said:
We are still working with figures, but the goal of 5% economic growth rate for 2009 will be difficult to reach.
It is because Vietnam’s economy’s performance in the time to come will greatly depend on outside factors. If the world’s economy is better off, which allows better exports, the 5% goal will be feasible. However, if not, big difficulties will remain.
Some analyses have said that China has shown signs of recovery, which will benefit some countries, including Vietnam.
In fact, China is an important factor, but not a decisive one. Our exports to China are big, but they are nothing compared with other markets like the US, Japan and EU.
Meanwhile, the key export markets all have been predicted to have minus 2% growth rates this year. Especially, the minus 5% growth rate has been predicted for Japan.
Do you mean that we still cannot come up with an exact scenario for the economic growth rate for Vietnam?
We will be able to say exactly when we will escape from difficulties, or imagine if the economy performs under the V, U, L or W shapes in Q2 2009, when we have more information. Any forecasts given at this moment just have the accuracy level of 50%.
What would you say about signs of the economy’s recovery in Q1 2009?
It is difficult to assess the consumption growth in Q1, as Q1 had festivals and Tet, which could ‘hide’ reality.
In Q1, the GDP growth rate was just 3.1%. The information about orders for businesses has been confused, some businesses say they have got orders until September, others say orders have dropped sharply.
Imports decreased by 45% in Q1 over the same period of last year. Meanwhile, nearly 90% of imports are materials for production and equipment, which reflects difficulties in production.
With no orders, no inputs for products and decreased FDI, businesses have to cut down production and cut imports.
But some experts have attributed the import decreases to the big stocks of materials which businesses imported last year?
We need to reconsider figures. In reality, the situation of jobs, orders has become worse. However, when we asked managers, they all said that the growth rate would be some 4% or higher in Q3.
FDI coming into Vietnam has been decreasing. What would you say about the impacts of the decreasing FDI on the national economy?
We have been relying on FDI, but investment from that source decreased sharply in Q1.
However, I don’t think that it is a worrying problem, if the investment commitments made before are fulfilled. In 2008, the committed FDI capital was $64bil. Meanwhile, the implemented capital in 2008’s Q1 was low, just $1.2bil.
The economy’s performance heavily depends on the implementation of the government’s demand stimulus package and the world’s economy’s performance.
By the way, what do you think about the two demand stimulus packages?
They are good. In the current difficulties, businesses need restructuring. The first package helps businesses survive difficulties; the second package helps businesses restructure and make investments.
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