Vietnamese economy may grow at 5-6% in 2009, ADB economist

Vietnam's economic growth rate may slow to 5-6% in 2009 amid global economic downturn, said an Asian Development Bank (ADB) economist here in a recent interview with Xinhua.

Talking about the impact of the current global financial crisis on Viet Nam, Ayumi Konishi, ADB country director to Vietnam said that Vietnam's financial sector is not much affected by the global

financial sector as Vietnam's financial sector is little exposed to the world's financial markets.

"In the reverse pattern of what is happening in U.S. or Europe where the problems started in the financial sector and then spread to the real economy, in the case of Asia, and in Vietnam in particular, we will first see the impact on the real economy through possible difficulties in export, tourism, capital inflow. And employment may not grow as fast as we may wish to see," said Konishi.

Viet Nam relies much on export for economic growth. With the slowdown of global economy, Vietnam's export activities in coming years will suffer, said Konishi. "But the impact may differ from products to products," he said.

Regarding the tourism sector, Konishi said Viet Nam may not be able to enjoy as good number of foreign tourists visiting the country in the face of global crisis as the country has seen in the past years.

The economist raised his concern about foreign capital flow to Viet Nam, given that Viet Nam has been receiving a good amount of remittances from overseas Vietnamese in the past years.

Vietnamese people who usually send money to Viet Nam from abroad may now have less money to be sent to the country. And that may hurt the country's foreign exchange, domestic consumption and construction in the coming year, he said.

Viet Nam will likely to see the slowdown not only in remittances but also in foreign direct investment, said Konishi.

"Many foreign investors may have great difficulty in mobilizing capital to be invested because of the limited liquidity in the global financial market, some companies themselves may also be affected by the current economic situation. Or those that already invested in Viet Nam may now find that it is less urgent for them to expand their production facilities in the context of the worsening economic situation", said Konishi.

Konishi said he believed that the recently-announced government's economic stimulus package can help Viet Nam in keeping the national economy growing in the next year.

Viet Nam recently launched a 6-billion-U.S. dollar stimulus plan as part of its efforts to boost the national economy amid the global downturn. The money will be spent on investment, particularly infrastructure projects.

Viet Nam has registered an average Gross Domestic Product (GDP) growth of 7.5% in the past ten years, one of the fastest in the world. The National Assembly of Viet Nam recently made the economic growth target for next year at 6.5%, same as the estimated figure for this year.

The 6.5% growth target, in the eyes of Konishi, seems to be "too optimistic", given what the global economy is happening.

He said the government needs to be mindful that an aggressive stimulus package may aggravate Vietnam's external vulnerability, so the government needs to be extremely careful. "After all, five to six percent growth is still a good growth rate in the face of the current global financial crisis," Konishi added.

He affirmed that the international community and foreign investors still place firm belief in Vietnam's strong growth potentials toward medium to long-term prospect. "We believe Viet Nam, in general, will stay in the right course," said Konishi. (Xinhua)