This year will unlikely be a tough year for Vietnam’s economy as it has seen satisfactory signs during the first few months of this year, driven by the government’s effective stimulus measures, World Bank’s chief economist in Vietnam, Martin Rama.
Vietnam had recorded a GDP growth of 3.1 per cent in the first quarter and Martin Rama believes the country’s growth will be higher during the second and third.
WB’s report on Vietnam’s economic situation, which be presented at the Informal Mid-term Consultative Group Meeting (CG) slated for June 8-9 in the Central Highlands province of Daklak, noted that 2009 will be a gloomy year for the global economy, especially several developed countries in Asia.
Newly emerging Asian economies will still stand firm, with Vietnam recording a first quarter GDP growth of 3.1 per cent compared with Singapore at minus 10.1 per cent or Japan’s minus 15.2 per cent, the report stated.
The WB said that the fall in the price of raw materials has led to the Vietnamese construction sector recovering strongly with a growth of 6.92 per cent in the first three months and a two-digit growth expected for the whole year.
This is a good signal for the Vietnamese economy, said Rama, adding that other economic sectors have seen relatively satisfactory developments. The power sector expects to enjoy a growth of between 10 per cent-12 per cent in the second quarter and 16 per cent for the whole year.
The increasing demand for power shows that the economy will develop much more vigorously in the future, said Rama.
The economist told reporters that in the first quarter this year, Vietnam’s exports grew 7.4 per cent while China’s exports fell 19.7 per cent, Thailand’s exports were minus 23.2 per cent and Japan’s minus 60 per cent.
Vietnam’s economic recovery is resulted from the government’s stimulus packages, Martin Rama noted, adding there had been a more active urban labor market. The total number of jobs offers in April was much higher than last October although the number of job seekers was lower.
The domestic stock market has recently taken off with the Ho Chi Minh Stock Exchange’s VN-index increasing by 35 per cent since the beginning of the year. The exchange is now amongst the markets showing the most rapid growth in the world.
Rama praised the flexibility and dynamics of the Vietnamese economy. Compared with other economies in the world, Vietnam has several advantages such as a young population and an abundant and increasingly skilled labor force, with 1 million people joining it every year.
He highly appreciated the Vietnamese government’s response to the world economic crisis during the first half of 2009 after coming up with various solutions such as tax exemptions and delay, interest rate subsidies and an increase in social spending.
The WB economist recommended the government consider carefully an US$8 billion stimulus package recently submitted to the National Assembly. The package is feasible but much too large, as it accounts for 8.3 per cent of the country’s total GDP.
WB Country Director Victoria Kwakwa told reporters on the sideline of the Vietnam Business Forum held in Ho Chi Minh City recently that economic bottlenecks remain the main hurdles for the government of Vietnam to solve in the second half.
“So, yes it has some adverse impacts but we also see the things, some very early signs that things might be picking up. So it’s very important in the next round of stimulus planning to make sure that the early signs will become actual recovery. We’re hopeful that could be achieved in the second half of the year,” Kwakwa said. (Local sources)
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