09:20 | 29/05/2015 Trade
The Vietnam Economic Report (VER) 2015 gives two scenarios for growth and inflation. Accordingly, growth may reach 6.1% and inflation will cap-off at 1.9% (scenario 1) or an overall growth of 6.3% with an inflation rate of 3.2% (scenario 2).
The report was announced at a workshop held in Hanoi by the Vietnam Centre for Economic and Policy Research (VEPR), the University of Economics and Business and the Australian Embassy.
VEPR Director, Nguyen Duc Thanh, said some world economic factors may affect the Vietnam’s economy. For instance, the US’s plan to tighten monetary policies using the interest rate in June may cause certain pressure on exchange rates in import countries.
World oil prices are predicted to gradually surge due to limited supply, thus local transport businesses won’t see profits from price drops, like experienced in 2014.
The growth of economies in the US, the EU and Japan – all major trade partners of Vietnam – will be brighter in 2015, which will facilitate Vietnam’s exporting to these countries. However, local businesses need to continue to improve the quality of products to meet the market demand with strict technical barriers, Thanh said.
Thanh added that trade deficit will remain a major issue in 2015, and may run until 2016.
Thanh said exchange rates must be adjusted in accordance with the global market. Macro-balance may be broken in 2016, and a new spiral of inflation – exchange rate will be formed.
The report proposed that exchange rate policies should be flexible towards adjusting the Vietnam dong and maintaining or raising foreign currency reserves in order to boost public confidence in monetary policies.
Vietnam needs to apply technical barriers for imported products, improves businesses’ awareness on logistical barriers within imported countries and accelerates institutional reform.
In the long-run, it is necessary for Vietnam to increase productivity and added value. This requires comprehensive administration and institution reform programmes as well as in the business sector, Thanh concluded.
Source VOV News