Some small- and medium-sized enterprises have gone bankrupt and many others are on the verge of doing the same.

The domestic consumer production index (CPI) rose by 20.71 percent in the last 11 months but dropped by 0.76 percent in November. With the trend of world economic slowdown, this has posed many challenges for Vietnam’s economy.

“It’s high time for the state to assist enterprises and people in boosting the economy,” says Tran Du Lich, head of the HCM City Economics Institute.

Solutions

The stimulation of demand has been put forward as a solution to the shrinkage of production. However this method must be calculated carefully to avoid possible inflation.

Economists said farmers need assistance first because they are the most vulnerable to economic changes. The state should help peasants with seeds, water resources, low fees, and even subsidies.

Dr Nguyen Minh Phong, Vice Head of the Hanoi Socio-economic Research Institute, says that now is a good time for boosting the supply of goods and services catering to average-income consumers, who make up the majority of the population.

“There is now a real, huge demand for houses and flats priced at the average level of VND500 million, while too many villas and high-standard houses have been built,” Mr Phong says.

In addition, the drop in the prices of essential goods such as construction materials may provide a good opportunity for boosting major economic projects, including public works and critical infrastructure.

Economic forecast needs to be more effective

Vietnam does a poor job in forecasting economic issues on both the micro and macro scales, says Dr Tran Dinh Thien, head of the Vietnam Economics Institute. It also performs badly in receiving warnings and responding with timely policies.

According to Mr Thien, it’s necessary to conduct basic research and open discussions involving a wide range of scientists, entrepreneurs and policymakers. 

The government has admitted that poor economic forecasting is one of the main factors leading to recent high inflation and economic instability.

At its recent annual meeting, Prime Minister Nguyen Tan Dung proposed a five solution package to curb the economic recession, step up exports, and slash complicated administrative procedures while ensuring social security and sufficient food for the poor in remote areas and victims of natural calamities.