In order to obtain a zero percent growth rate in exports, which means the same export turnover as in 2008, Vietnam will have to obtain the export growth rate of 19 percent in the last five months of the year in comparison with the same period of 2008.

Director the Department for National Economics Issues under the Ministry of Planning and Investment Bui Ha said on August 5 on the sideline of the regular Government press conference that even a zero percent export growth rate may be unattainable.

Ha said that his ministry has checked the figures about export revenues of the most important export items and has found out that Vietnam has lost some $6 billion due to price decreases in the world’s market. This means that if the export prices had been equal to that of the previous year, Vietnam’s exports by the end of July would have reached $37-38 billion instead of $32 billion.

In some documents released recently, the Ministry of Planning and Investment said: “Export turnover in 2009 will surely not be as high as last year’s. Export turnover has decreased by 13.4 percent already in the first seven months of the year. Export prices may increase towards the end of the year, but the increases will be slight.”

Ha answered reporters’ questions on the sideline of the meeting.

TBKTVN: So, will we adjust the export target further?

Ha: There will not be any further adjustment. The National Assembly sets a goal for the Government to strive for. However, it is quite a different story about if we can obtain the target, while how high export turnover is not a thing that we can decide. The Government can only take measures to encourage exports and create favourable conditions for enterprises to export products. Meanwhile, we cannot decide the export prices in the world.

TBKTVN: So, we may have to see exports decreasing, and we may also have to see the GDP growth rate lower than the adjusted GDP growth rate target?

Ha: Regarding the GDP growth rate goal, we have used a lot of measures to stimulate demand in the national economy. We have been trying to stimulate the domestic market, especially rural market, where 70-80 percent of the population is living.

The agriculture production sector did not suffer big impacts of the global economic recession in the last year, while it serves as the market for industrial products.

In GDP structure, we can see growth in the agriculture sector and in the service sector (the retail turnover increased by 20 percent). The tourism sector has also increased by 20-30 percent.

We launched the demand stimulus package worth $7-8 billion, which is a small sum if compared with the demand stimulus packages of other countries. However, if we compare the ratio of the package to GDP, we would see that the ratio is the same as the ratios of other countries.

The demand stimulus package has brought good effects as it has supported industrial production and financial institutions as well. Some pessimistic researchers predicted that many businesses would go bankrupt by the end of 2009. However, as you see, they are recovering, while banks have better liquidity and made profit in the first half of 2009.

TBKTVN: Where can we earn foreign currencies from if we continue seeing exports decreasing?

Ha: In fact, when exports decrease, imports decrease accordingly, because we have to import materials to make products for export. As import turnover decreases, the trade deficit is low if compared to export turnover. This is really not a big achievement. It is simply because our production and economic growth rates have been slowing down, leading to the low imports of materials.

In principle, a payment balance is unattainable in a developing economy.

TBKTVN: In a recent report, the World Bank warned that the cash flow to the national economy is decreasing, while the cash outflow is increasing, which may lead to the imbalance of the foreign currency supply and demand…

Ha: There has not been any problem with our foreign currency reserves. However, there have been warnings that the export decrease will have bad influences on the international payment balance.

However, the foreign currency earning will still depend on many other factors, for example, the official development assistance (ODA) capital. Meanwhile, ODA disbursement has been going very well. And foreign direct investment keeps flowing in. Therefore, we can say that there is no problem with the foreign currency supply.

TBKTVN: How will the decreases in import and export turnover affect the state budget collection?

Ha: No serious problem has occurred with the state budget collection as previously thought. A lot of receipts have been improved. The income from crude oil is an example. When we asked the National Assembly to adjust the export turnover target, the crude oil price was just $40-50 per barrel in the world’s market. Meanwhile, the price has surged to $70 per barrel.

I think that the state budget deficit of 7 percent of GDP is within reach. I think that the actual figure would be less than 6 percent.

Source: VietNamNet/TBKTVN