Vietnam advised to diversify its economy (22/5)
22/05/2012 - 21 Lượt xem
According
to ESCAP, Vietnam is striving to keep pace with developed economies,
the growth of which depends mostly on industrialization and economic
restructuring. Over the past decade, Vietnam has taken steps to reduce
the income gap between it and high-income countries while focusing on
increasing production capability. However, its income levels and other
economic and social indexes remain much lower compared with high-income
countries.
Due to the rapid expansion of credit and money supply sources in recent years and the depreciation of the Vietnamese dong,
the Vietnamese economy was plagued by inflation of 18 percent in 2011.
However, concerns about inflation have been reduced to some extent. The
Government's measures to maintain macroeconomic stability are expected
to bring Vietnam's inflation down to single digits in the second half of 2012.
Commenting on Vietnam's economy in the first four months of this year, ESCAP said that macroeconomic
indexes were stable, inflation was decreasing, outstanding loan balance
fell strongly, bank interest rates had declined, and foreign exchange
rates had remained stable, while the country's foreign currency
reserves had increased. However, the Vietnamese economy remains
unstable as the country's Gross Domestic
Product (GDP) grew by just four percent in the first quarter of 2012 -
the lowest GDP growth rate obtained by Vietnam since 2003. Businesses
in almost all sectors, especially in industries such as processing,
manufacturing and construction, still have to cope with numerous
difficulties in production and sales. Notably, business inventory levels in the processing industry have increased.
According
to ESCAP, Vietnamese public confidence in government's management
capability is reviving but remains unsteady; the macroeconomic
foundation has not been
fundamentally improved; inflation and bank interest rates have been
reduced but remain high; foreign currency reserves have increased but
remain short; bad debts and the liquidity in the banking system has not been thoroughly dealt with; Vietnam's credit ranking in the international financial market remains low; the quality of growth is not high;
businesses continue to face difficulties in production and sale due to
declining consumption and the consumer price index is high.
To resolve these problems, ESCAP experts advised that Vietnam should diversify its economy, create more productive employment opportunities and increase domestic consumption. These solutions would not only
help Vietnam reduce poverty but also promote total demand and stimulate
growth as they increase pay for workers depending on their productivity
and create more opportunities for poor people to take part in
productive economic activities.
Vietnam
and some other regional countries still have to cope with the risk of
rising food prices which primarily affect vulnerable people, increasing
hunger and poverty as well as social problems. The best way to reduce
food prices in the long term is increasing agricultural productivity.
It is necessary to increase and diversify non-agricultural job
opportunities in rural areas in agricultural value chains (processing,
transportation and distribution) in order to expand the domestic
market of agricultural products and encourage increased agricultural
productivity. Along with economic restructuring efforts, Vietnam must
continue to boost rural development and implement a 'green renovation'
by encouraging farmers to apply new farming techniques to create new
plant varieties. Farmers must be provided with government price
subsidies when buying input materials such as fertilizer. Their access
to credit loans must be facilitated./.
Source: VEN
Source: VEN
