VINACHEM

The country’s economic picture could turn rosy this year or next if the Government continued its efforts to stabilize the macro economy and deal with structural weaknesses.

This view was shared by National Assembly deputies and economic experts at a seminar on issues and solutions for the nation’s economy in 2014, which was held in HCMC last Friday.

Tran Du Lich, deputy head of HCMC’s National Assembly deputies delegation, said, “There are factors making us believe that the economy could regain high growth, market confidence could improve and businesses could grow in a more sustainable way.”

High inflation has persistently dogged the economy over the past 5-6 years but it is now under control, he said, and the banking sector is still facing challenges but risk of a couple of poor-performing banks collapsing is almost over.

The World Bank chief economist in Vietnam, Sandeep Mahajan, said Vietnam’s medium-term economic prospects are good despite risks. The country would be able to achieve GDP growth of 5.5% next year provided the Government continues its prudent macroeconomic policy, tapers its fiscal stimulus and focuses more on economic reforms, he said.

Foreign investors’ business confidence remains stable as proven by a rise in incoming remittances from overseas Vietnamese, a steady improvement in foreign direct investment and a stable exchange rate, Lich said.

He noted fiscal policy, monetary policy and spikes in prices of public services and essential goods should be coordinated in a way that wards off inflation risk.

The deputy head of the Vietnam Institute for Economic Management, Vo Tri Thanh, said it was hard to lower interest rates further since expectational inflation still hovers around 7%, the Government will increase bond selling, and huge bad debt remains to be settled.

Thanh noted a spike in budget overspending and additional bond issues designed for raising funds for investment would help economic and export growth. “However, associated risks such as higher inflation and trade deficit are high.”

Economic expert Le Xuan Nghia informed the seminar that the central bank had settled around one-third of bad debt in the banking system and that the Government was centering on bad debt settlements in a bid to revive credit for the economy.

Net credit growth is much lower than the 12% plus which the central bank reported late last year, Nghia said.

Thanh of the Vietnam Institute for Economic Management said Vietnam could pin high hopes on the Trans-Pacific Partnership agreement between 12 countries in the Pacific Rim, the ASEAN+6 Free Trade Area agreement between the 10 Asean members and their FTA partners, namely Australia, China, India, Japan, New Zealand and South Korea, and the FTA agreement between Vietnam and the EU.

But the Government should be consistent in policy making to stabilize the macro economy, proceed with institutional reforms and restructure the economy, he said.