|
National economy keeps up momentum in second quarter
Domestic and foreign analysts say that the Vietnamese economy is showing 'green shoots' of recovery and that the government should carry on with its current stimulus packages and prevent inflation from rising in the post-crisis period.
Positive signs
The national economy is picking up, driven by a surge in the value of industrial production in April which was higher than the average growth in the first quarter of this year. Notably, several industrial products obtained a rapid growth including fertiliser (10 percent), fibres (11 percent) and liquefied gas (33 percent).
Dr Nguyen Minh Phong, a specialist from the Hanoi Institute for Socio-Economic Research, says that there are four reasons why the economy could make a quick recovery.
First of all, Vietnam has already suffered from the impact of the global economic crisis that originated from the US, therefore it is expected to ride out the crisis faster than the US itself.
Secondly, the government’s stimulus packages have been introduced at the right time and focused on key areas, helping to build up public and business confidence in the stable development of the macro-economy.
Thirdly, many countries and economic organisations have poured thousands of billions of US dollars into their economies in the hope of revamping the global economy. This process will have a positive impact on the Vietnamese economy thanks to an increase in exports and foreign direct investment.
Lastly, while the world is struggling to overcome the food crisis, Vietnam has just had a bumper rice crop, and a high rice export value has motivated other sectors to maintain their growth rates.
Dr Nguyen Dinh Cung, head of the macro-economic department under the Central Institute for Economic Management, echoes Dr Phong, saying that many businesses have resumed production after a period of stagnation and decline.
However, he says that the enforcement of the government’s stimulus packages is still slow in several provinces and cities, and many businesses have not got access to subsidised loans. Only 5 to 6 businesses in each of these localities have enjoyed this policy, says Mr Cung, citing the results of his recent fact-finding tour of the provinces and cities.
“This is a small figure compared to the real demands from businesses,” says Mr Cung. “It is necessary to iron out snags in administrative procedures and the supply of information to ensure all businesses in difficulty can access the support policy.”
According to Dr Nguyen Minh Phong, in order to seize the opportunity when the economy begins to rebound, the State should examine key projects and expand the scale of investment.
“In the short term, the State should encourage the export of agro-forestry and seafood products and other essentials, for these products are used by global consumers, even during the crisis. In addition, these products have short production cycles and require less capital.”
Inflation – a risk factor
The consumer price index (CPI) of 0.35 percent recorded in April has posed a real risk of inflation returning, as the total capital for domestic and overseas stimulus packages is substantial. In addition, businesses have not cut down on production costs properly. The recent low base prices of products are mostly attributed to a fall in consumer demand and the State’s support policies.
Dr Nguyen Duc Thanh, an economic specialist, says that when the global economy recovers, the prices of input materials will certainly rise due to larger demands. In addition, a large volume of capital in circulation as a result of the stimulus packages and a slight increase in interest rates are expected to drive inflation up.
“The crux of the matter is to keep a close watch on the government’s stimulus packages and the macro indexes of domestic and global economies,” says Dr Thanh. “The packages have been put in place and they should be put on hold as soon as we sniff out signs of inflation rather than see inflation edging up only to apply a tight monetary policy again that often does more harm than good to the national economy.”
vov
|
