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Old July 15th, 2009, 11:04 PM
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Default Viet Nam to Achieve Moderate Growth as Global Economy Slows

Although Viet Nam will also be adversely affected by the global economic downturn as in many other countries because of the openness of its economy, it may still be able to achieve a moderate level of growth, projected at 4.5% in 2009 and recovering to 6.5% in 2010, the Asian Development Bank (ADB) said in a major report released today. In making these projections, the Asian Development Outlook 2009 (ADO), the annual ADB publication that forecasts economic trends in Asia, noted that the near-term economic prospects of Viet Nam are clouded by an unusually high level of uncertainty on the length and depth of the global economic downturn and the possible adoption of additional fiscal stimulus by the Government of Viet Nam. A slowdown in growth of the domestic economy is inevitable, with certain sectors likely to be severely impacted. The report notes the difficulty for new entrants to the job market because of the slower economic growth.

"The main near-term challenge for Viet Nam is to limit the slowdown in growth while keeping the fiscal and current account deficits in check," says Ayumi Konishi, ADB Country Director for Viet Nam. "The Government should accelerate economic reforms and further open up its economy in accordance with its WTO commitments, in order to maintain the confidence of investors and the public at large. These policy actions will protect the continuing flow of foreign direct investment."

There will be growing unemployment as factories are reducing the size of their operations or even closing down. There is expected to be growing under-employment in the rural areas as unemployed people return to their home provinces.

"Special attention needs to be paid to address unemployment and under-employment, and to supporting small and medium-sized enterprises and the poor," says Ayumi Konishi. "In the medium term, the Government needs to ratchet up growth without fueling inflation or widening the current account deficit".

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members - 48 from the region. In 2008, it approved $10.5 billion of loans, $811.4 million of grant projects, and technical assistance amounting to $274.5 million.


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