Vietnam’s socio-economy has improved since the beginning of the year. The Consumer Price Index (CPI), which saw negative growth for many months, increased 0.27% in July compared with the previous month and 2.68% compared with last December. Economists say, however, that Vietnam’s economic growth has not been as fast as expected.

Vu Duc Dam, Minister and Head of the Government Office, says weak purchasing power is the major obstacle to the economy. Normally, when demand is low, it’s necessary to increase demand which can lead to inflation. Vietnam is set to manage its fiscal and monetary policies with long term targets, keeping the inflation rate below 7%, and slightly increasing the growth rate. Minister Dam says: "When the consumer price index is stable or seeing negative growth, some people say we have to stimulate demand otherwise the economy grows too slowly and it’s not difficult to control inflation. But economists and cabinet members believe maintaining the macro-economy is the key task which should not be neglected."

Considering that it’s feasible to control inflation but difficult to obtain a 5.5% economic growth rate, cabinet members have proposed measures to solve obstacles of the market, especially outlets for agricultural products. Minister of Agriculture and Rural Development Cao Duc Phat called for close cooperation from the Ministry of Industry and Trade and the Foreign Ministry to expand export markets for agricultural products. Minister of Industry and Trade Vu Huy Hoang said the ministry will boost trade and investment promotional programs and consolidate and expand export markets, particularly for the Vietnamese staples of rice, seafood, and coffee.

Expanding credit and boosting the disbursement of investment resources are seen as practical measures to increase demand. Prime Minister Nguyen Tan Dung says: "First, we have to expand credit. Over the past 7 months, credit growth was 4.9% while the target is 12%. The main task is to raise demand, but not increase bad debts. We expand credit to raise demand. This is an important channel. Over the past 7 months, investment from the state budget was less than 50%. We have to disburse and strictly manage state budget allocations for this year. Government bonds for this year must be spent and we should think about increasing disbursements for construction projects to be completed this year." 

The Prime Minister asked ministries, sectors, and localities to encourage and apply incentives to attract investment, ensure matching funds for ODA disbursements, and closely monitor land clearance for major infrastructure projects.

Through the government’ measures and determination, Vietnam’s economy could reach its growth potential.

T.Chung + Van Hieu