VN needs to pre­pare for eco­nomic slow­down

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HAØ NOÄI — A global fi­nan­cial cri­sis was un­likely to hap­pen in the next few years but Vieät Nam needed to pre­pare it­self for a slow­ing global economy, for­mer Deputy Prime Min­is­ter Vuõ Khoan said yes­ter­day.

Khoan told a con­fer­ence on Vieät Nam’s re­form and de­vel­op­ment there had been no signs of a de­pres­sion among the world’s big economies though they had shown signs of slow­ing re­cently.

“Af­ter the last global fi­nan­cial cri­sis in 2008, the world has de­vel­oped de­fen­sive tools against the risks. The world pre­dicted an­other cri­sis on a 10-year cy­cle, but it is un­likely an­other will hap­pen in 2018,” he said.

“In the next 12 years, there will be no cer­tain­ties that the world won’t un­dergo any crises as what we are en­coun­ter­ing now are trade com­pet­i­tive­ness and mon­e­tary ten­sions, which could be volatile and un­pre­dictable,” Khoan said.

“We hope for the best sce­nario that there is no trade war be­cause Vieät Nam, with other economies, would suf­fer a lot.”

Trade com­pet­i­tive­ness, which re­ferred to ten­sions be­tween China and the US, would go up and down over the next few years and would be shaped depending on each coun­try’s se­cu­rity, po­lit­i­cal and geo­graph­i­cal con­di­tions, Khoan added.

Global economies would have to mix be­tween com­pet­i­tive­ness and co-op­er­a­tion, be­tween bi­lat­eral and mul­ti­lat­eral re­la­tion­ships, in or­der to de­velop a win-win sit­u­a­tion, he said.

Vieät Nam, as well as other na­tions, must be ready for that sce­nario and min­imise its vul­ner­a­bil­ity by in­creas­ing in­ner strength and mak­ing the best use of for­eign cap­i­tal, while work­ing with the in­ter­na­tional com­mu­nity to­wards a free- trade world, and adapt­ing to any pos­si­ble changes, Khoan said.

“It’s a must for Vieät Nam to trans­form its eco­nomic growth model as tech­no­log­i­cal ad­vance­ments mean fewer job op­por­tu­ni­ties for low-cost labour and its nat­u­ral re­sources are run­ning out.”

Vieät Nam should utilise poli­cies to “mit­i­gate short term vul­ner­a­bil­i­ties through bet­ter fis­cal poli­cies, deepen re­forms to en- hance com­pet­i­tive­ness on trade and in­vest­ment poli­cies, build skills by im­prov­ing ac­cess to post­sec­ondary ed­u­ca­tion, and pro­mote in­clu­sion by ex­pand­ing em­ploy­ment ser­vices and broad­en­ing ac­cess to dig­i­tal tech­nolo­gies,” said Sud­hir Shetty, chief econ­o­mist for the East Asia and Pa­cific Re­gion of the World Bank.

Global growth was es­ti­mated at 3 per cent for 2018 but it would be grow­ing slower by 2020 at a rate of be­low 3 per cent, Sud­hir said.

A sim­i­lar sce­nario was also ex­pected for the world’s gross do­mes­tic prod­uct (GDP) growth, and the main rea­son for the global eco­nomic slow­down was due to slower growth of the Chi­nese economy, Sud­hir said. Ac­cord­ing to Ous­mane Dione, World Bank Coun­try Di­rec­tor for Vieät Nam, the pri­vate sec­tor was key to driving the Viet­namese economy by in­creas­ing pro­duc­tiv­ity and cre­at­ing more added value.

One so­lu­tion to em­power the lo­cal busi­ness com­mu­nity was to re­solve ex­ist­ing is­sues in the reg­u­la­tory sys­tem that were pre­vent­ing com­pa­nies from reach­ing their full po­ten­tial, he said.

Cor­po­rate gov­er­nance qual­ity should get bet­ter and for­eign cap­i­tal must be used to im­prove tech­no­log­i­cal back­grounds and added value for lo­cal firms so they could link to­gether and join the global value chain, Ous­mane said.

Vieät Nam had been try­ing to achieve a de­vel­oped pri­vate sec­tor that could pro­vide a buf­fer for the coun­try’s eco­nomic growth, ac­cord­ing to deputy min­is­ter of plan­ning and in­vest­ment, Leâ Quang Maïnh.

“A de­vel­oped pri­vate sec­tor is one of the four ma­jor driv­ers for the Viet­namese mar­ket economy, along with lean pol­icy ap­pa­ra­tus, hu­man re­source man­age­ment and mod­ern in­fras­truc­ture,” Maïnh said.

Ac­cord­ing to McKin­sey se­nior con­sul­tant Rich McClel­lan, the pri­vate sec­tor ac­counted for 8090 per cent of GDP in de­vel­oped economies while the fig­ure was lower in de­vel­op­ing economies.

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