A press briefing was held in Hanoi on May 8 by the CIEM to announce the 2007 Vietnam Economic Report and forecast the economic situation in 2008.

The Vietnamese economy grew at 8.5 percent in 2007, the highest level since 1997. However, it is difficult to regard this figure as impressive since the investment proportion compared to the GDP growth rate in 2007 is too high, at 44 percent.

The financial and real estate markets and banking activities had a little impact on the real economy as the financial, banking and insurance sectors still accounted for less than 2.0 percent of GDP in 2007.

Dr. Dinh Van An, the Head of the CIEM said, “The Vietnamese economy has exposed inherent weaknesses in the wake of its entry to the World Trade Organisation (WTO), particularly in its measures to ensure rapid and sustainable development. In addition, Vietnam’s weaknesses in its legal framework, human resources and infrastructure development have limited the disbursement of a large amount of foreign direct investment (FDI).

A macroeconomic analysis shows its instability and risks as the inflation rate based on consumer price index (CPI) hit an 11- year high record of 12.6 percent.

Prospects for the Vietnamese economy in 2008

Unforeseeable fluctuations in the world economy accompanied by soaring inflation and other risks are principal elements that can have a negative impact on the Vietnamese economy.

It is difficult to reach the set target for 8.5-9.0 percent economic growth and keep the inflation rate at 11-12 percent. Therefore, it is essential to devise appropriate measures aimed at reducing financial risks, stabilising the national economy and creating a firmer foundation for sustainable development.

This year, Vietnam has enormous difficulty in maintaining its economic growth rate as high as last year as the inflation rate will remain high, even higher than the previous year. In addition, the trade deficit will be much higher and might not be dealt with in a short period of time. As a result, it is imperative to readjust these targets to conform with the current situation.

In 2008, Vietnam should continue accelerating the equitisation of State-run enterprises, develop the private economic sector and strictly implement its commitments to the WTO in order to ensure a stable economic growth and sustainable development.

It is important to be fully aware of the complexity and seriousness of the rising instability and risks to the macro-economy so that proper measures to deal with this can be worked out, even it means the economic growth rate has to be reduced for a short period of time.