The UEB research team participate Autumn Economic Forum 2014

In the end of September 2014, the Autumn Economic Forum 2014 held by Vietnam National Assembly’s Economic Committee, Vietnam Academy of Social Sciences (VASS) and Vietnam Chamber of Commerce and Industry (VCCI) has attracted the attention of numerous economic experts.

This is the sixth forum, which gathered solutions to run the economy. As a result, the forum attracted social attention, from ordinary people or the entrmanagers have the interest in listening to the reliable assessments of the economy.
The research team of VNU University of Economics and Business led by Assoc.Prof.Dr. Nguyen Hong Son have attended and given speech at the forum.
On 28 September, the Autumn Economic Forum 2014 continued with the experts’ discussion on “The economic restructuring: Expectation on a strong and basic change.”

Assoc.Prof.Dr. Nguyen Hong Son at the Autumn Economic Forum 2014

In his paper, Assoc.Prof.Dr. Nguyen Hong Son - the UEB Rector highly evaluated that the macroeconomic of the first three quarters of 2014 with four highlights, namely the growth rate was higher than the same period of two years previously, inflation is down to the lowest rate within 12 years recently, the balance of payments surplus and exchange rate are stable, budget balances exceeded the setted plan.
Those are remarkable results, especially in the context of obstinate bad debt, disadvantageous manufacturing and the negative impact of China’s illegal oil rig location in Vietnam East Sea, he stated.
However there are two points that need concerning. Firstly, the growth target still faces several challenges, particularly in 2015 when the overall economy is at exceptionally low demand, for example in investment demand. PMI index is a downward trend in the last few months though still above 50. Investment in the first 8 months of 2014 is at low rate, investments from the state budget slightly increased by only 2.1%, FDI implementation increased by only 4.5% over the same period. The investment of non-state enterprises are more likely low due to unresolved bad debts.
To achieve a growth rate of 6% in 2015, according to Assoc.Prof.Dr. Nguyen Hong Son, the investment growth rate has to reach respectively 6% and the ratio of investment in 2015 up to 30% of GDP. However, the investment of GDP does not likely gain 30%, accordingly the growth rate hardly achieves over 6%.
Regarding inflation, the current forecast given by Dr. Son remains high rate. He predicted that inflation this year could drop below 4% and the same situation for the next year due to the low demand. Current consuming trend is only 6%, investment does not achieve 30% of GDP, that does not suppose high inflation, which requires a solution. While the real interest rate is high, the gaps between interest rates of foreign and domestic currency will be higher, leading to the business on interest rate differentials.
Fiscal policy does not have much surplus since the budget balance is limited. In Dr. Son’s opinion, fiscal policy in the next period is defense policy to ensure revenue and expenditure, controlling the intensive budget deficit below 5% and public debt below 60% to ensure stable development in 2014 and 2015.
Regarding bad debt, he stated, it is time to change the perspective of bad debt. Specifically, it is necessary to handle bad debts promptly otherwise the restructuring of banking system would be negative impacted. In addition, the consequences of bad debts must be shared to other subjects for suffering.
Assoc.Prof.Dr. Nguyen Hong Son emphasized the transferring to a market economy is not a magic remedy to cure all the ills of Vietnam’s economy. The history of crisis has proved recession failures of both the State and the market. The most important thing is the appropriate institutions for the operation of a market economy, including issues related to ownership, competition, monopoly and dispute resolution mechanism, he said.
International integration has been occurring actively, we have to be aware of integration. We should be ready for supporting the business to meet their needs, consult the business before, during and after the negotiations, meanwhile enhancing the role of associations or organizations.
The propagation of integration, restructuring the economy or institution perfecting today are still abstract, Dr. Son said that there should be a propagation program to the people to understand all these contents.

Bao Anh

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