Experts urge policies to keep economy afloat

Most economic think tanks at the seminar agreed that Viet Nam had to accurately evaluate the current status of the country’s economy and its trends in the current global context to implement appropriate measures.

"The ability to forecast the trends of Viet Nam’s economy is still very weak, both in macro and micro terms, and also the ability to cope with the new situation," said Tran Dinh Thien, deputy director of the Viet Nam Institute of Economics.

Thien said the Government considered these weaknesses as one of the main causes of high inflation and economic turmoil in Viet Nam over the past few months.

"It’s now hard to predict trends as the world’s economy plummets, but most of the predictions show that turmoil will last at least until next year," Thien added.

Thien said it was necessary to carry out more profound studies, coupled with open dialogue between the Government, economic experts and businesses in order to produce more appropriate measures.

Meanwhile, senior economic expert Le Dang Doanh said that before the world economic turmoil began, Viet Nam already had its own economic crisis - the inflation problem.

"We said that inflation in Viet Nam was going down, but we did not mention the increasing rate of unemployment, bankruptcy - results of soaring inflation and the ongoing economic recession."

Doanh said Viet Nam’s economy is facing severe hardships as its keys export items such as oil and rice see greater and greater losses.

He said that most producers and exporters are reporting that prices of exports such as rubber, coffee, pepper and seafood are all falling.

Textile and apparel exports, the country’s second-biggest earner just after crude oil, were likely to miss growth targets the Government set for 2008.

"While oil has dropped from over US$140 to just over $40 now, our rice exports are facing more severe competition from Thailand and China."

Doanh said that while the tourism industry is receiving less foreign visitors, investment from the private sector is decreasing even more sharply.

"All of these negative indicators need profound attention and evaluation in order to develop accurate reactionary measures as soon as possible," he added.

Meanwhile, general secretary of the Viet Nam Banking Association Duong Thu Hug expressed her doubts about economic targets for 2009 set by the Government.

"We set a number of optimistic targets for 2009, but I’m afraid that even the growth rate of 6.5 per cent will likely not be reached," Huong said.

She stressed that the banking sector, which is already having difficulties because of the ongoing turmoil, will face an even harder time next year as local businesses are about to see shrinking markets, both domestically and internationally."

Most of the world is preparing money to rescue their economies, what about Viet Nam?" she asked.

Viet Nam, like much of the world, is trying to stimulate its economy amid the global downturn, but it is having problems because it must also keep rampant inflation from flaring up again.

With a small and relatively insulated banking sector, the country was not directly exposed to the subprime crisis that sparked the Wall Street meltdown, subsequent world-wide credit crunch and turmoil on global financial markets.

But the wider economic repercussions of what has been called the worst global economic crisis since the Great Depression are already being felt in this developing economy, especially in the crucial export sector.

Amid shrinking overseas demand, Viet Nam’s monthly exports have steadily fallen from $6.5 billion in July, to $6 billion in August, to $5.3 billion in September, and finally to $5.1 billion in October.

Inflation has been in the double digits all year and stood at 26.7 per cent year-on-year in October, a slight fall after a drop in global energy and commodity prices.

Consumer price increases started to level off in September and fell month-on-month by 0.2 per cent in October.

The Government is looking to bring annual inflation down to 23-24 per cent in 2008, and to less than 15 per cent in 2009.

It also cut the economic growth target from 8.5 per cent last year to around 6.5 per cent for this year and the next although some economists predict gross domestic product growth will be below 6 per cent next year.

The Government also predicts that export growth will slow to around 13 per cent in 2009 from a projected 33 per cent this year.