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Economy looks ship-shape, say experts
Viet Nam's economy to continue to prosper was the consensus of expert opinion at a seminar in Ha Noi yesterday to discuss the impact of the tardy global recovery.
Viet Nam would continue to be a destination for foreign investment, Siji Kawazoe of Sumitomo Trust and Banking Company, told the gathering sponsored by PetroVietnam Securities Incorporated.
The factors in its favour were political and social stability; potential market growth and abundant youthful labour with a strong motivation to learn, he said.
It had also made progress toward open-door policies for investment and had geographical advantage as well as population density.
But there were factors which could discourage foreign investment, the economist warned.
These included changing government policies and regulations; poor infrastructure, especially the lack of electricity; undesirable business practices and a lack of downstream industries and skilled labour.
Stronger regional competition for foreign investment was also a threat.
The seminar's participants – Asian economists and stock-market analysts – agreed that strong short-to-long-term economic growth would continue throughout the region despite the weak rebound in developed markets such as the United States, Europe and Japan.
"The emerging and developing economies will now play a more important role in the world economy," forecast Senior Nikko Cordial Securities Incorporated market economist Hiroki Shimazu.
Conditions that were especially favourable to emerging and developing economies included the easier monetary policy in advanced economies and the rise of the middle and upper class in emerging economies.
Two key factors were likely to ensure positive growth for Asian economies, said Central Economic Management Institute representative Vo Tri Thanh.
These were high saving rates that could be used for investment and increasing consumption, partly the result of an emerging middle class, especially in China, India and Viet Nam.
Most Asian countries were becoming less dependent on Organisation-for Economic-Co-operation-and-Development, OECD, countries as destinations for their exports, said Daiwa Capital Market chief economist Prasenjut K.Basu.
Instead they were sending a greater proportion of their exports to developing countries.
But not Viet Nam
The U.S, Japan, and Europe still accounted for an overwhelming share of the country's export markets.
The economist argued that inflation had become an increasing concern for Asian countries; in OECD countries, it was more likely to be deflation.
The economist, who outlined the progress of several of Asia's emerging economies including China, India, South Korea, Indonesia and Viet Nam, said that "Viet Nam is an obvious beneficiary" of China's tighter labour market.
Daiwa Capital Market forecasts that Viet Nam's yearly growth rate of 6.4 per cent this year will soon reach 7.3 – the national average in the 15 years before the economic downturn.
But investors will expect the Government to be more responsive about publishing such macro-economic indicators as national debt and reserves.
Central Economic Management Institute representative Vo Tri Thanh said that ambiguous policy messages from the Government had adversely affected Viet Nam's international credit.
Viet Nam's police makers had prioritised economic growth and stabilising macro-economic factors, he said.
Although indicators for the first seven months including inflation, exports, and balance of payments were relatively positive, Viet Nam's macro economic risks remained considerable, he warned.
"We can't grow the economy just by pumping in capital," he said.
"Proper co-ordination between monetary and fiscal policies is crucial." PetroVietnam Securities research department forecasts that the VN-Index is likely to stutter in the trading range 430 – 550 with limited capital inflow during the last months of the year.
Total credit is expected to increase by only 25 per cent this year, it says.
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