Deputy PM warns of economic slowdown

Signs of declining economic growth have emerged with many enterprises declaring themselves bankrupt, says Deputy Prime Minister Nguyen Xuan Phuc.

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  • In a government report on the implementation of the socio-economic plan for 2011, Deputy PM Phuc noted that economic growth in the first quarter of this year was barely 4 percent, much lower than last year’s figure (5.84 percent). The industrial and construction sectors grew by only 2.94 percent.

    Tighten financial and monetary policies have helped contain inflation and stabilized the macro-economy but is also challenging businesses, especially small- and medium-sized ones.

    High loan interest rates, difficult access to capital, rising input costs, and low consumption have led to a fall in production and even dissolution of businesses, making it difficult for social stabilization and improvement of people’s living conditions, he said.

    In the first four months of this year, more than 17,700 businesses have been dissolved or temporarily stopped operating, representing an increase of 9.5 percent against the same period last year.

    The growing bad debts and the shrinking imports of materials are other negative factors that will affect investment in production, especially for exports in the coming months.

    Deputy PM Phuc also pointed to other challenges such as smuggling and trade fraudulence of counterfeit and low-quality goods, which have violated businesses’ and consumers’ legitimate rights and caused a huge loss to the State budget collection.

    In the meantime, social order and security remains complicated in some areas with the growth of social evils and crimes, especially organized crime, threatening people’s living conditions.

    The ineffective prevention of corruption and waste has provoked mass protests, especially over land use, while the failure to control food hygiene, improve the quality of hydro-electric power plants, and reduce traffic accidents and jams in big cities remains challenging to boot, he said.

    Positive results

    However, Mr Phuc emphasized that Vietnam achieved most of the targets laid down in the 2011 plan for socio-economic development.

    GDP growth was maintained at 5.89 percent to contain inflation and ensure money supply, credit growth and international payment balance, he said.

    The State’s Budget collection increased by 18.4 percent but its spending was 13.8 percent higher than expected. So, budget overspending stayed at VND115,500 billion, or 4.4 percent of GDP (0.9 percent lower than planned). Public debts, government debts and foreign debts remained at safe level.

    The country’s export turnover in 2011 hit US$96.9 billion, up 34.2 percent against last year and its trade deficit dropped to US$9.84 billion (or 10.16 percent of export revenue) – the lowest on record.

    Social welfare continued improving along with the strengthening of national defence and security, as well as external relations.

    Government solutions

    Deputy PM Phuc said that with real socioeconomic developments in the country, the government will continue focusing on boosting production and business, curbing inflation, and stabilizing the macroeconomy to lay a firm foundation for sustainable growth.

    The government will also effectively implement its project to restructure the economy for the benefit of higher quality, efficiency and competitiveness, Mr Phuc said.

    In addition, the government will complete the legal system, synchronously carry out the administrative reform program, enhance State management efficiency, promote the struggle against corruption and waste, strengthen national defence and security, social order and safety, as well as external relations, and improve the quality of information and communications.