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Five pct GDP growth rate out of reach?
According to the Central Institute for Economic Management (CIEM), the rate of inflation remains high despite being lower than the 2008 level and it is impossible to resolve the high trade deficit in a short period of time.
In mid May, the CIEM will announce the 2008 Vietnam Economic Report, which reviews the results obtained and refers to difficulties and challenges the national economy has coped with over the past year.
2009 is the third year marking the fairly comprehensive integration of the Vietnamese economy into the world economy and is the fourth year that Vietnam has implemented a plan for socio-economic development in 2006-2010 period with its US$6 billion stimulus package in the context of the current global financial and economic downturn.
In 2009, the world economy is predicted to continue going down with economic growth slower than 2008 due to the strong impacts from the economic meltdown and unremarkable signs of recovery. The slowdown of the world economy can adversely affect the Vietnamese economy, which inherently relies on foreign investment and exports.
Dr Dinh Van An says that the global economic downturn is a crisis of structure and institutions and it will take the US, the EU, Japan and the Republic of Korea at least 10 years to solve crisis-related issues. However, Vietnam is being affected by the global economic downturn in terms of limited production and business not in terms of institutions, therefore, the country’s economy can rebound earlier than other economies.
The Vietnamese economy is a newly emerging and shifting economy thus opening up opportunities for investment and development, Mr An notes.
It’s worth adjusting economic growth rate
The implementation of economic stimulus policy, to a certain extent, will give rise to inflation. “Therefore, the objective of economic growth set by the 12th National Assembly for 2009 will be unfeasible once there are negative effects on Vietnam’s economy and the implementation of stimulus policy fails to achieve the desired results,” says Dr. Pham Lan Huong, head of the study group of the Central Institute of Economic Management.
Dr. Dinh Van An describes 2009 as an important year in the 2006-2010 period, saying if the growth rate target is set too high, it will be difficult to achieve it.”
CIEM’s prediction is based on prospects for the world’s economy and its impact on Vietnam’s economy in 2009, particularly for implementing macro policy in line with WTO commitments and reducing the speed of inflation.
In 2009, Vietnam’s economy is predicted to grow more slowly than 2008, with high inflation and a big state budget deficit, partly as a result of forecasts by implementing the government’s stimulus policy.
Forecasts by international organizations also showed the growth rate of Vietnam’s economy in 2009 would be much lower than in 2008. The International Monetary Fund (IMF), the Asian Development Bank (ADB) and the World Bank (WB) predicted the growth rate of Vietnam’s Gross Domestic Production (GDP) in 2009 to increase by 3.3 percent, 4.5 percent and 5.5 percent, respectively, compared to 2008.
“The task of achieving a GDP growth rate of over 5.5 percent in 2009 seems far from being realistic,” says Dr. Dinh Van An.
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