The rate is too high and should be below 5 percent to ensure the country’s ability to repay loans over the long-term, she said.

The 2009 Economic and Social Survey of Asia and the Pacific suggested that spending on promoting the long-term sustainability of the energy and cooking markets and dealing with the deficiencies of the social welfare system should boost domestic demand in the short term.

They are also a valuable investment for the future, it said.

But the best way forward for Vietnam is to increase investment in education and health, Mia Mikic, economic affairs officer in ESCAP’s Trade Policy Section, said.

Domestic consumption, which accounts for over 70 percent of GDP, would play an important role in the face of declining growth, Huong said.

The government should not get involved in commercial activities but focus its efforts on developing infrastructure, education and health, she said.

According to the survey, the GDP growth rate is expected to slow down further to 4 percent this year after falling to 6.2 percent last year, the slowest pace since 1999. The government has said it is targeting 6.5 percent growth.

More regional trade help

Asian-Pacific economies need to trade more with each other to help contain the global economic crisis, which comes as volatile food and fuel prices and climate change are hurting the poor, the survey said.

In a statement it issued, the UN agency called for urgent regional economic cooperation.

Poverty would increase in the Asia-Pacific region due to the frequency of natural disasters and rising commodity prices, the survey said. Asia is the most disaster-prone area in the world, with half its disasters and 65 percent of the victims, it said.

The “impacts of the crises have hit the world’s poor the hardest, two thirds of whom live in the Asia-Pacific,” said Noeleen Heyzer, UN Under-SecretaryGeneral and Executive Secretary of the ESCAP, in the statement. “By strengthening our domestic markets, the region can provide a buffer to global market fluctuations.”

It is the second economic crisis to hit the region in a little more than a decade and the stronger government finances that were built up since the 1997-98 Asian financial crisis have started to buckle under the weight of the global recession, Heyzer said.

Trade in the region has gone from double-digit growth to double-digit declines, she said.

“The fact is that the Asia-Pacific region is more economically integrated with the rest of the world than with itself,” she noted.

Trade among regional economies accounts for 37 percent of exports in Asia, compared with 51 percent for signatories to the North America Free Trade Agreement and 68 percent in the European Union, she said.

Reported by Ngan Anh (With inputs from Bloomberg)