Vietnam should focus on targets to stabilize the macro economy rather than pursuing for high economic growth to avoid painful consequences later, said Le Dang Doanh, a member of the Institutes of Development Studies.
Deficits in Vietnam’s trade, state budget, and imbalances in current accounts are at alarming levels and inflation might soar in 2010, therefore, the government should take priority to stabilize the economy, Doanh said.
The government is now tough on monetary policy after it has adjusted exchange rates, and reduced U.S. dollar deposits interest rates applied for economic institutions. However, he pointed out the macro balance in the forex market is much more important and that trade deficit with China is too big. There are signs of inconsistence in policies by government’s ministries and agencies, which is very dangerous, Doanh said.
Doanh also warned of possible high inflation and he explained that it takes about four to six months for high credit growth to translate into inflation. Last year, credit growth rate was 38% or 7 times of GDP growth rate. In addition, high inflation also comes from the global expected higher inflation, dong devaluation, and higher local prices of electricity, coal, and water.
The government should also use fiscal policy and cut all unnecessary expenditures and increase credit efficiency, Doanh recommended.
Besides, Doanh believes it is now time to restructure state-owned corporations such as Vinashin, Bank for Investment and Development of Vietnam, Vietnam National Coal-Mineral Industries Group and Electricity of Vietnam.
Vietnam should not continue pursuing high growth based on lands leasing and building golf courses, shipments of raw products including rice, seafood and minerals. It is now time to focus on processing and higher quality products. (Pioneer)
Vietnamese
