GDP growth rate must reach over 6%: expert

Published: 19/10/2008 05:00

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VietNamNet Bridge – Dr. Tran Du Lich, head of the Ho Chi Minh City Economics Institute, said that Vietnam needs to obtain the GDP growth rate of over 6%, even if high inflation or deflation occurs.

Dr. Tran Du Lich, head of the Ho Chi Minh City Economics Institute

I think that pursuing policies on curbing inflation and stabilizing the macro economy is the right move for now. We are going to raise the prices of some commodities, such as electricity, which will affect the consumer price index. In general, we must keep wary over the high inflation.

However, you may well know that there exists uncertainties the world’s financial market. Experts have expressed their worries that the problems of the financial market will affect the commodity market, thus causing the global economy crisis.

In case the global economy has a minus growth rate, Vietnam’s exports will face a lot of difficulties. If so, Vietnam will have to focus on stimulating demand and expanding credit instead of curbing inflation.

I think that we should prepare for that situation, and we should not focus only on fighting inflation.

What will happen to our GDP growth rate, if deflation occurs?

My viewpoint is that even when deflation occurs, we need to obtain an economic growth rate of over 6%. In order to do that, we need to expand the domestic market, stimulate the demand, stimulate investments, loosen the monetary policies, and reduce interest rates.

The most important goal for us is to obtain the high economic growth rate of over 6%, even if the high inflation or deflation occurs. This is the figure we need to reach in order to ensure that serious social problems do not occur.

What will happen if the inflation rate exceeds 15%?

I don’t think the inflation rate would be higher than 15%.

You can see two extremes of the markets in 2008. The commodity market is hot with the prices of food, foodstuff, and metal are skyrocketing, while the financial market is cold. However, the heat has reduced while the coldness has become stronger, which should be seen as the signal of a recession.

Therefore, I lean towards the idea about the preparation for the world’s economic recession rather than a new price fever.

Which GDP growth rate project do you think is more feasible, 7% or 6.5-7%?

I advocate the 6.5-7% project, which was suggested by the National Assembly’s Economics Committee as a ‘soft’ figure. We need to consider the current negative situation to set a suitable economic growth rate.

Let’s come back to the targeted GDP growth rate. While the Government has lowered the GDP growth rate, will localities still preserve their previously set targets? Do you think that there are problems in the management?

I myself have suggested that HCM City should not adjust its targeted economic growth rate.

The country needs to adjust the targeted economic growth rate in order to serve the macroeconomic balancing. Meanwhile, of localities that obtain high economic growth rates, such as 7.8% or 10%, this would not in any way influence the national economy.

(Source: Dan tri)

Update from: http://english.vietnamnet.vn//interviews/2008/10/809324/

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