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NA Deputy warns Vietnam of economic uncertainties
Though Vietnam has obtained many big achievements in the first nine months of 2010, making people firmly believe that targets set for the whole year are within reach. However, Ha Van Hien, Chair of the National Assembly’s Economics Committee, in a recent interview given to Dau tu chung khoan, argued that Vietnam should still be wary of economic uncertainties.
Dau tu chung khoan: Vietnam’s economy has gone through ¾ of the path in 2010. What would you say about Vietnam’s achievements Vietnam?
Ha Van Hien: The biggest targets set for 2010 are macroeconomic stabilization, reasonable growth rate and social security. At this moment, we can say for sure that all the basic targets will be met. Especially, the inflation rate has been curbed at five percent, which is forecast to hover around seven percent for the whole year 2010. The budget overspending has been curbed at below seven percent, which is forecast to stay at less six percent by the end of the year.
Regarding exports, the growth rate is expected to reach 19 percent this year, while the trade deficit could be restrained at less than 20 percent. In the first eight months of the year, more than one million jobs were created, which is expected to increase to 1.6 million by the end of the year.
DTCK: How have Government policies affected the national economy?
Hien: I think the Government has made considerable progress in economic management. Right at the beginning of the year, the Government decided that the top priority must be macroeconomic stabilization. I must remind you that, in October 2009 when the National Assembly gathered, macroeconomic stabilization was not a top priority, ranking third among priority tasks.
In recent years, Vietnam regularly has quick response to situations. In 2007-2008, Vietnam only set new policies after troubles occurred, which explained why they had low impact. Now, the problem has been settled. For example, the Government began the task of curbing inflation right at the end of the year.
I know many people complain about monetary policies, but I have to say that the policies must aim to obtain socio-economic targets set by the National Assembly. The State Bank of Vietnam has been put under hard pressure, because it needs to ensure high growth rate and curb inflation at the same time
DTCK: Can you see any problems in Vietnam’s economy? Some people have warned that stability is not high. What would you say about that?
Hien: There still latent macroeconomic uncertainties. For example, the inflation rate in Vietnam is relatively high in comparison with other countries in the region and in the world. The trade deficit remains high which will lead to the payment balance deficit and decreases in foreign currency reserves. Though the export achievements in 2010 are good, if we do not count on gold and precious stone exports, the trade deficit would be over 20 percent. Meanwhile, there are some problems with the monetary policies, such as high interest rates and changeable foreign exchange rates.
The other problems are the high budget overspending and high public debt levels.
There are many risks and uncertainties latent in Vietnam’s macroeconomy. Therefore, the policies need to be transparent and consistent. The message is very clear: macroeconomic certainties should be put as the top priority task.
There are two different viewpoints about Vietnam’s economy. Optimists think that basic indexes show improvement: GDP growth rate is high, export increases, while the inflation rate and budget deficit have been curbed. Pessimists think that the economic risks are very high. IMF, WB and ADB all think that the inflation rate would be 8.5-9 percent this year.
If the dong interest rate, dollar interest rate and the expected dong depreciation cannot be well-managed, this may lead to financial speculation and would not be good for the national economy, because money will pour into gold, securities, foreign currencies and real estate, and not to the production sector.
The second risks lies in the international payment balance, which has reached four billion dollars. According to IMF, Vietnam’s foreign currency reserves are about 13 billion dollars, a thin level.
The third risk is the budget deficit, which, according to international experts, is 8-9 percent.
vietnamnet, dtck, sgtt
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