VN needs to prepare for economic slowdown
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.