Bright Spots in Vietnam Economy in 2nd Quarter

According to National Centre of Economic Information and Forecast (NCEIT – MPI), Vietnam economy recorded high growth rates in the first quarter compared to other countries in the region. Although it is lower than that of previous years, it is still a positive sign in the conditions of global economic crisis. According to experts, Vietnam economy will have more bright spots in the second quarter.

In March, prices of 30 out of 32 industrial products fell, in April the number reduced to only 7 products. Certain products have gained back the output and growth rates such as coal, processed aquatic products, garment, building materials. According to Ministry of Industry and Trade, some other industries will increase production capacity namely electricity, mechanics, fertilizer. The decrease of industrial production in April was only 0.28 percent compared to 5 percent in March. It signaled some improvement in second quarter and recovery in next quarters of the years.

 

CPI in April increased 0.35 percent against March. It helped slow down the inflation from previous months. With stimulus in investment and consumption, the demand increases in commodities and materials. The prices of foodstuff and fertilizer remain stable in the North and slightly increase in Southern provinces. It will help the production and distribution in Vietnam and the second stimulus package will promote further.

 

In April, the export value has been restored gradually. Gold has not been re-exported as in the past. So far, Vietnam has signed export agreements of nearly 3.7 million tonnes of rice compared to 4/5-5 million tonnes planned for 2009. The rice export has also been improved in both volume and price. For its part, garment industry has expanded both domestic and international markets. With such improvement, the export in May and second quarter will be better.

When the world economy has a good sign of recovery, it affects Vietnam immediately in April. The efforts on stimulus and preventing inflation promise economic improvement in the second quarter and the second half of 2009.

 

According to NCEIF, the policy has initial impact on the economy. The increase of world prices especially export prices of essential commodities as well as trade promotion and export to China and Africa will improve the situation in late 2009. The government has decided to expand domestic market to consume products of Vietnamese enterprises. The better outlet will increase the economic growth.

 

However, due to unpredictable conditions of the world economy, NCEIF also warns caution of the deteriorating development and appropriate measures against it.

 

Though the stimulus package to support interest rates and businesses is considered as timely and will improve the situation, NCEIF recommended that in face of major difficulties, the government should take stronger policy in May and the second quarter to prevent the impact of the world economic recession. The government should update information, provide precise statistics and implement correctly the stimulus package. The government should also study and apply gradually the economic restructuring, especially on production, investment and human resources development.