Victoria Kwakwa: Vietnam Should Address 3 Threats in H2

The government of Vietnam should prepare to address three challenges: high inflation, a deficit in payment balances and the state budget deficit in the second half of this year, Victoria Kwakwa, World Bank Country Director in Vietnam said.

 

The government provided timely solutions to prevent an economic slowdown in the first half of this year, which helped achieve GDP growth of 3.1 per cent in the first quarter and of 4.5 per cent in the second quarter, Victoria Kwakwa noted.

 

A significant rise of saving among local people and the great demand of the domestic market have helped Vietnam stay firm against any shocks from the global economic downturn, she pointed out.

 

The government’s 4 per cent interest rate subsidized lending program has worked well in the first months of this year, under which local firms gained access to cheap loans that helped them lower prices of commodities on the market, she noted.

 

In my view, if the program is maintained, it will bring about risks including rapid credit growth, leading to high inflationary pressures and ineffectiveness of bank loans. Therefore, the government should reconsider and have effective solutions, the World Bank official advised.