Vietnam should not ignore forecasts: economist

VietNamNet Bridge – Though calling The Economist’s forecast of 0.3% GDP growth rate in 2009 ‘too pessimistic’, Dr Tran Dinh Thien, acting Director of the Vietnam Economics Institute, said that Vietnam should not ignore the forecast.

What do you think about the modest 0.3% GDP growth rate in 2009 forecast by The Economist?

I think that the GDP growth rate The Economist has forecast for Vietnam is too pessimistic; I don’t think the GDP growth rate will be so low.

However, we should not ignore the forecast, as the experts have reasons to give such a forecast. We should not consider only one figure, the GDP growth rate, we should consider the analysis system and we will find out many issues which may heavily impact Vietnam’s economy.

We should also consider other issues like jobs, social security and the stability of sustainable development.

In order to curb the economic downturn and maintain high growth, the government has initiated demand stimulus packages. What do you think Vietnam needs to do to ensure the success of the packages?

As many other experts have said, it is still too early to assess the efficiency of demand stimulus packages. We should not expect that the national economy, after two years of bearing high inflation and facing a lot of difficulties, will react quickly to the government’s measures.

However, I think that we need to focus on some things. For example, we need to provide credit for businesses on the principle of fairness. This will help private small- and medium-size enterprises (SMEs) access bank loans, while SMEs can create jobs and maintain growth.

Besides, I think we also should support the development of agriculture and rural areas as the sector can ensure the safety of the national economy in difficulties. I think that we need to pay more attention to stimulating consumption demand and supporting the poor.

Experts say that our biggest problem is weak competitiveness, and that it is now the right time to reshuffle and raise competitiveness. What is your viewpoint about that?

The economic crisis has exposed the problem in competitive edge. Therefore, it is now the right time to reshuffle. We need to raise the added value of products and should not keep a high proportion of raw materials and low labour costs.

Regarding forex management, experts believe that Vietnam should devaluate the VND to encourage exports. What is your viewpoint?

The exchange rate should be regulated in a flexible way so as to stimulate domestic consumption, stimulate exports and limit the trade deficit. However, this is always difficult as it touches a lot of matters, from debts to capital turnover.

Standard Chartered has released a short report about Vietnam’s economy, which predicts that the GDP growth rate of Vietnam in 2009 will be 4.2%. The UK-based bank said that the target of 6.5% GDP growth rate in 2009 is unlikely to be reached. Vietnam’s inflation is forecast to drop dramatically to 6.5% from 22% last year, and to 4% in 2010. Despite the current difficulties, Vietnam remains an attractive destination for international long-term investors. Political security, cheap labour costs and the large domestic market prove to be the big advantages of the country. On March 18, the World Bank lowered the GDP growth rate forecast for China to 6.5%, 1% lower than the 7.5% it forecast in November 2008.

VietNamNet/VnMedia