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No crisis next year: minister

Update: July, 04/2018 - 07:00
Việt Nam’s financial affairs are in good shape with the flexible management of the central bank, sound liquidity at commercial banks and stable interest rates. — Photo
Viet Nam News

HÀ NỘI – Việt Nam’s economy is not likely to experience an economic crisis next year, according to Minister of Planning and Investment Nguyễn Chí Dũng, though it has suffered such crises in 1979, 1989, 1999 and 2009, following consistent 10-year cycles.

Dũng spoke at the national governmental e-meeting reviewing Việt Nam’s socio-economic development in the first half of 2018 on Monday.

The risk of an economic crisis in 2019 has been discussed in the media in recent days, as commentators wonder whether the booming is due for a bust.

According to the Government official, the previous explosions had their origins in the financial and real estate markets, and Việt Nam’s financial state of affairs is now in good shape with the flexible management of the central bank, sound liquidity at commercial banks and stable interest rates.

As for the securities market, Dũng said that the stock market has slowed down after a growth spurt, while the housing market has cooled down after the Government took drastic measures to reign in land speculation fever in hot markets, especially at the sites expected to become special economic zones.

“This suggests that the economic crisis is unlikely to occur according to the decade cycle,” Dũng said.

However, he added that State management authorities needed to keep a close watch on macroeconomic movements to take quick action in response to market changes.

He also noted the tendency for Việt Nam’s growth to slow down towards the end of the year.

Việt Nam’s gross domestic product (GDP) dropped from 7.45 per cent in the first quarter of 2018 to 6.79 per cent in the second quarter. The country’s first-half growth averaged 7.08 per cent, which is rather high, but to secure the annual target of 6.7 per cent, Dũng said more efforts are necessary for the latter half of the year.

He said the growth rate should reach 6.53 per cent in the third quarter and 6.36 per cent in the fourth quarter to guarantee the Government’s annual growth target.

Concerning inflation, the minister said that the consumer price index (CPI) continuously increased in May (0.55 per cent) and June (0.61 per cent) which raised concerns about the feasibility of keeping the inflation rate below 4 per cent by year-end.

Therefore, he emphasized the need to implement price stabilisation and economic adjustment measures, especially when there are typically two strong price increases at the start of the new school year (in September) and in the last month of the year.

In addition, there is the possibility that a trade war will break out, which could bring both challenges and opportunities for Việt Nam, Dũng said.

Việt Nam is not targeted in this war, so the country can take advantage of the opportunity to increase imports and exports, according to Dũng. However, global instability will create competition between economies, which will have a significant impact on developing countries, including Việt Nam.

"So we need to keep a close watch on the opportunities and challenges of the war," the minister said. – VNS



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