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Government Considers Stimulating Demand (26/9)
26/09/2011 - 14 Lượt xem
Almost nine months after it thoroughly implemented inflation taming and macroeconomic stability assurance solutions, Vietnam has obtained encouraging results: inflation has slowed; commercial bank loan interest rates have begun decreasing; exports have continued to rapidly grow; the trade deficit was lower than expected; foreign exchanges rate have been stabilized and the State's foreign currency reserves have been considerably enriched. International financial organizations have highly praised these results. The World Economic Forum (WEF) ranked Vietnam 65th among 142 countries and territories in terms of their macroeconomic environment in 2011, while the country ranked 85th a year ago. According to the WEF assessment, Vietnam ranked 59th and 65th among 142 countries and territories in terms of competitiveness in 2010 and 2011, respectively.
Only looking at these positive results could provide a mistaken impression. The reality poses a variety of challenges for administrators, investors and business people, while progress and lags are also simultaneously appearing in this period. The Asian Development Bank (ADB) recently forecast that Vietnam would record an economic growth rate of 5.6-5.7 percent in 2011, which is lower than previous forecasts and the Government's revised target.
A major challenge lies in falling domestic purchasing power. The General Statistical Office (GSO)'s data show that goods retail and service revenue soared 8.9 and 10.3 percent in January and February 2011, respectively (this numbers do not include inflation and price increase factors) but growth then dropped to 8.7 percent, 7.7 percent, 6.4 percent, 5.7 percent and 4.6 percent March, April, May, June and July, respectively and the figures for the first eight months of 2011 are only 3.9 percent higher than the same time in 2010. This growth is even lower than that of 2008, a year in which the economic crisis was at its worst.
Goods retail and service revenue is always an important index as it reveals income and purchasing power. The higher this index (except price-related factors) the more developed production and trading activities are, and the higher the motive force for economic growth.
Increases in goods retail and service revenue encourage businesses. This index fell monthly over these past six months, which is the major reason for the existing large goods inventory. According to the GSO, as of August 1, 2011, the processing industry's inventory increased 18 percent over the same time last year, of which furniture inventory soared 87.5 percent and non-alcoholic beverage inventories rose 66 percent.
A large number of construction projects have been delayed because of different reasons, while the cement industry seriously suffered as a result. Cement sales from early this year accounted for just 60 percent of the year's target. The Vietnam Cement Industry Corporation (VICEM) has sold domestically and exported more than 12 million tonnes of cement since the beginning of this year, while its 2011 target is more than 20 million tonnes.
Galloping inflation has caused most of citizens to practice austerity and cut spending. Since early this year, there have been more than 150,000 people registering as unemployed, triple the number during the same time last year, according to a Ministry of Labor, War Invalids and Social Affairs report; thousands of businesses nationwide have halted operation or announced bankruptcy; in Bac Giang Province, a newly developed industrial hub, 43 businesses have halted operation or announced bankruptcy, while the number in Bac Ninh, another new industrial center, is 44.
Increasing purchasing power is a way of promoting economic growth. Experts believe that the Government needs to strengthen demand, both in terms of investment and consumption, through adopting stimulus solutions in the coming time. Decreasing commercial bank loan interest rates is a demand stimulus solution, while speeding up important national projects and promoting the rapid operation of foreign direct investment (FDI) projects are important./.
Source: VEN
Source: VEN
