Joining Forces for Economic Restructuring

Aiming to create an important momentum for achieving targets for five year period of 2011-2015, the Ministry of Planning and Investment (MPI) proposed to manage the 2013 economy towards a more sustainable macro – economy; lower inflation rate and higher growth rate over 2012.

 

Targets are expected to be achieved based on conditions of 2012. As the Ministry forecasts, despite large pressures, major targets of “prioritising inflation restraint, stabilizing macro-economy, maintaining appropriate growth rate…” of 2012 are likely to be realised.

 

Specifically, main balances such as inflation (forecasted to be 8 percent), export (US$113 billion, up 16.6 percent), trade deficit (US$1 billion, accounting for 0.9 percent export value), completing budget revenues and expenditures…As for economic growth rate of 5.2 percent, lower than planned one of 6 – 6.5 percent, MPI said that despite the low rate, there are positives changes, creating opportunities for the economy to develop sustainably in following years.

 

As a result, according to many experts, “prioritising inflation” of 2012 has initially made effects and therefore it will not be the top priority of 2013. Another more comprehensive target is “stabilizing the macro-economy”, of which besides low inflation rate, growth rate is expected to be higher than the achieved one of 2012.

 

Accordingly, the MPI forecasts GDP growth rate increases about 5.5 percent, CPI growth rate remains 7-8 percent. Total export value will be aspired to reach about US$124.3 billion, up 10 percent over 2012, of which trade deficit accounts for about 8 percent of total export value. Budget deficit over GDP will be up to 4.8 percent and total social investment accounts for about 30 percent of GDP.

 

1.59 million jobs will be created, of which 85 thousand people will go abroad to work. Unemployment rate in urban areas will be maintained at the rate of under 4 percent. Poor household rate will reduced by 2 percent. Moreover, several large balances will be considered in development plan such as budget revenues and expenditures, capital for development, savings for consumption, international trade balance.

 

According to International Financial Research Group, Institute for Strategies and Financial Policies (Ministry of Finance), not only factors such as slow recovery of international economy and changing global money market, there are also three more big challenges in 2013: strained public debt crisis of Euro zone; dangerous conditions of the United States related to “financial cliff” because if the risk occurs and fiscal condition remains tightened, its economy will continue to shrink. The tense political condition in the Middle East and North Africa may create an oil price shock which will be likely to strongly influence domestic economy.

 

Moreover, economic growth rate of Vietnam in 2013 is forecast to lower because of Government solving banks’ bad debts. Export markets of Vietnam will also shrink when developed economies struggle with difficulties. Especially, global trend of economy restructure has been bringing Vietnam new challenges, requiring Vietnam to elaborate new appropriate solutions to ensure middle and long term targets of economic growth.

 

According to WB, policy makers should keep focusing on maintaining economic growth and reducing poverty despite unstable global economy, at the same time prepare for crisis. Macro-economic policies should react properly and carefully before the coming back of capital flows in order to minimise risks for the economy when the flows reverse. However, effects of macro-economic policies depend on conditions of monetary policies of other countries, and it will be a big challenge for Vietnam.

Dr Vu Viet Ngoan, Chairman of National Financial Supervisory Commission affirmed that targeted GDP growth rate of Vietnam for 2013 is appropriate and realisable. Potential one is higher, but GDP is under many pressures from demand and supply of the economy. Vietnam is resolved to realise targets of restraining inflation, stabilizing macro-economy, constructing a more sustainable foundation, these targets must be implemented comprehensively through the next 10 years.

 

Asian Development Bank (ADB) advised that, to improve market trust, the Government should commit more clearly about implementing reform and restructure. Specifically, disposing financial information about state owned banks and enterprises will be a strong signal of Government realising commitments.

 

To achieve above mentioned targets, plan making commissions for the Government have proposed even 9 solution groups, with the top priorities of stabilizing macro-economy, restraining inflation, directing policies. Accordingly, interest rates will be lowered in consistence with inflation reduction to ensure appropriate credit growth, helping enterprise access capital. At the same time, enhance supervision of banking system and credit institution, ensuring liquidity and system safety. Elaborate stricter sanctions to prevent illegal activities, providing inaccurate information related to credit activities…

 

At the same time, the Government manages prices based on market mechanism, with the regulation of the State to prices of electricity, coal, oil and gas, public services in a proper direction in accordance with the requirements of controlling inflation, ensuring demand-supply of essential goods. Management authorities will also enhance methods of managing markets, prices and preventing smuggling, actively provide accurate and timely information about macro-economy to avoid psychological price growth.

 

In the following year, to solve difficulties for enterprises, promoting producing development, the Government will consider about reduction on enterprise income taxes, supporting access to credit with proper interest rates; conducting appropriate solutions to reduce inventories… At the same time, the Government implements three breakthroughs related to restructuring economy, reforming growth model; actively manage inflation, stabilize macro-economy, ensure social security, stably reduce poverty, maintain national security, and prevent corruption.