HA NOI (VNS)— While last year's GDP of 5 per cent was the lowest in the last ten years, economists have predicted a gloomier economic growth for this year due to challenges facing the local economy.
The economists agreed at a workshop this week in Ha Noi, organised by the Institute of Finance and Economics, that the main challenges were bad debts, high inventories and a moribund real estate market.
Economist Ngo Tri Long said growth potential was at risk while low production and productivity and technological backwardness were holding the economy back.
Some participants thought bad debts could be even worse than the State Bank's warning. Duong Hoang Lan Chi from the Institute of Strategic and Financial Policy said bad debts influenced capital flows as well as the safety and efficiency of the local banking system.
Meanwhile, high product inventory was adding to the challenges. Vu Vinh Phu, chairman of the Ha Noi Supermarket Association, said inventories left many supermarkets facing long-term difficulties.
Data showed the highest inventories were in motor vehicles, furniture and chemical production and food processing.
Importantly, the difficulties had caused a market confidence crisis with consumers not willing to buy and investors refusing to chance their arm. Long said "Market confidence was seriously impaired, especially in the real estate market" and suggested it was necessary to rebuild trust in the market to achieve sustainable recovery in the economy.
Banking also had weaknesses. Doctor Nguyen Thi Hien said that the State Bank should pay more attention to ineffective banks than to controlling the gold market, mentioning that the gold market became more out of control when the State bank interfered.
Phu, the supermarket association chairman, said he appreciated the Government's policies to help enterprises but there was some unfairness in loan distribution for enterprises working in the supermarket industry. Some private supermarkets had asked for several years for loans to expand their businesses while others got a loan within a month. He suggested reducing value added tax for some essential commodities as it would be an encouragement for consumers.—VNS