Economy may worsen this year, says VASS

Economy may worsen this year, says VASS

Vietnam’s economy may further worsen this year if there are no drastic measures adopted right now, according to the Vietnamese Academy of Social Sciences (VASS), an umbrella group incorporating several research institutes.

This warning is included in a report on strengthening the macroeconomic stability and recovering the domestic demand conducted by a group of VASS’s economic experts. The report also refers to a chart showing the country’s economic growth cycles in the 1989-2012 period to underpin the forecast.

According to the chart, Vietnam’s economy fluctuates every four or six years. Specifically, the bottom of the economic growth was seen in 1989, 1993, 1999, 2003 and 2009.

VASS predicts that the economy will hit the bottom again this year, but there will be solutions for recovery in the 2013-2015 period.

However, the process of adjusting bringing Vietnam’s economy into a new orbit which is balanced and sustainable will take a lot of time, according to VASS.

“Therefore, there needs to be a medium-term vision for such an adjustment instead of only paying too much attention to short-term fluctuations of the domestic and global economies,” according to the report.

The report also suggests three scenarios for Vietnam this year, but all the three show gloomy prospects with the economic growth slowing down, high inflation and rising unemployment.

Among the three scenarios, the most optimal one, according to VASS, is 5.3% for economic growth, 7.3% for inflation and 3.85% for unemployment.

In proposals related to policies, VASS says that the Government should help recover domestic demand, stimulate end-users’ demand by halving the value-added tax (VAT) imposed on basic products to 5% and reducing the personal income tax from the start of the year rather than from July.

Besides, the Government should remove difficulties for enterprises by lowering the corporate income tax to 20% and halving the VAT on small and medium enterprises’ outputs.

VASS also suggests the Government reduce the real interest rate and facilitate small and medium enterprises’ access to loans via credit guarantee funds.

Moreover, the Government should carry out fiscal policies focused on the agricultural sector, according to the report.

vietnamnet