Economy needs basic restructuring

GDP growth of 6.68 percent in 2015 meant Vietnam was one of the most dynamic countries in the world

Towards sustainable development

NFSC Chairman Vu Viet Ngoan said that the report pointed out negative impact of the world economy on the Vietnamese economy last year, including the economic slowdown, low circulation of goods, declining prices of goods, crude oil and agricultural products, and volatile monetary policies in many countries.

However Vietnam was among the list of countries with the highest economic growth at 6.68 percent. The country’s financial sector was also strengthened with the rearrangement, merger and dissolution of a number of banks.

2015 saw a decline in a number of financial institutions including five banks and six securities companies. The enhancement of transparency, risk management and positive handling of outstanding loans among others were also mentioned.

Ngoan said that the 2015 financial system supplied nearly VND800 trillion via bank credit, share and bond issuance to the domestic economy, equal to nearly 19 percent of the country’s gross domestic product. “Inflation in 2015 was controlled at 0.6 percent, while economic growth was good, contributing to creating a good platform for Vietnam in the coming development periods,” Ngoan emphasized.

The report also forecasts that the world economy would face many difficulties in 2016, while monetary and fiscal policies in major economies would become unpredictable.

Limited policy space and financial resources are seen as main challenges for the Vietnamese economy. Economic growth may be improved thanks to the signing of free trade agreements, while macroeconomic stability can be maintained.

However the national economy may face risks such as fluctuation of fuel prices and slow development of the agricultural sector. The NFSC forecasts that Vietnam would see economic growth of 6.7 percent and consumer price index of 3-3.5 percent in 2016.

Objective view needed

In addition to positive results, the report also indicated many difficulties for the Vietnamese economy including dependence on the foreign direct investment sector, rapid increase in public debts and larger budget deficit, posing numerous challenges to the macroeconomic stability target. State Bank of Vietnam Former Governor Le Duc Thuy said that problems in terms of low labor productivity, slow improvement of technology and instability of distribution and sales networks needed to be resolved. Vietnam’s economic growth mainly still depended on the foreign direct investment sector, posing difficulties in driving towards sustainable development.

Duy Minh