Vietnam - A third scenario for national economy?

Lawmakers are asking the government to draft a new scenario for the national economy, as the economic slowdown is looming large and the 6-6.5 percent GDP target set for this year is unlikely to be met.  

At a National Assembly (NA) Standing Committee session last October, Minister of Planning and Investment Bui Quang Vinh was very eager to present the two scenarios for the economy in 2012. It was the first time more than one plan were proposed to manage the economy.

According to the first scenario, Vietnam’s GDP in 2012 is forecast to increase by 6 percent and export turnover by 12 percent to hit US$106.4 billion (of which trade deficit is estimated at US$12.8 billion, or 12 percent of the export revenue). Total social investment would account for 33.5 percent of the GDP while over-expenditure would not exceed 4.8 percent of GDP and CPI is likely to rise by less than 10 percent.

In the second scenario, strong growth is forecast, with the GDP rate reaching 6.5 percent, export turnover US$ 107.4 billion (of which import surplus will rise to US$12.8 billion, or 12 percent of the exports) and total social investment would account for 34 percent of GDP.

Vinh proposed that that the Government adopt the first scenario so as to address problems that may occur. He explained that if the world and domestic economies show green shoots of recovery, Vietnam will even achieve better results.

At that time, the Ministry of Planning and Investment was praised for its flexibility in managing the economy.

At another NA Standing Committee session six months later, lawmakers held that the MPI’s two scenarios proved unrealistic, and asked the ministry to prepare another scenario.

However, Minister Vinh replied that it is not the right time now to propose a third scenario, adding that it is too early to think of such a new plan.

Nguyen Van Giau, Head of the NA Economic Committee, agreed with the government’s proposal not to adjust the annual GDP rate, but asked it to work out growth plans and corresponding measures to execute the economy flexibly amidst global and national economic complications.

Addressing GDP growth is associated with other balances of the economy and provides the basis for the introduction of policies and disbursement of resources, he said.

NA Vice Chairwoman Tong Thi Phong said it is a must to carry on containing inflation and stabilizing the macro-economy which Vietnam has managed to do.

In addition, she proposed considering a suitable adjustment to economic growth.

Phung Quoc Hien, Head of NA Committee for Finance and Budget proposed a plan he described as “optimum” under which Vietnam is likely to achieve a GDP growth rate of 5.5-6 percent and contain the consumer price index (CPI) at 8-9 percent.

VOV

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