Illustrative image (Source: VNA)
 
Hanoi (VNS/VNA) - Vietnam’s economy is not likely to experience an economic crisis next year, according to Minister of Planning and Investment Nguyen Chi Dung, though it has suffered such crises in 1979, 1989, 1999 and 2009, following consistent 10-year cycles.

Dung spoke at the national governmental e-meeting reviewing Vietnam’s socio-economic development in the first half of 2018 on July 2.

The risk of an economic crisis in 2019 has been discussed in the media in recent days, as commentators wonder whether the booming is due for a bust.

According to the Government official, the previous explosions had their origins in the financial and real estate markets, and Vietnam’s financial state of affairs is now in good shape with the flexible management of the central bank, sound liquidity at commercial banks and stable interest rates.

As for the securities market, Dung said that the stock market has slowed down after a growth spurt, while the housing market has cooled down after the Government took drastic measures to reign in land speculation fever in hot markets, especially at the sites expected to become special economic zones.

“This suggests that the economic crisis is unlikely to occur according to the decade cycle,” Dung said.

However, he added that State management authorities needed to keep a close watch on macroeconomic movements to take quick action in response to market changes.

He also noted the tendency for Vietnam’s growth to slow down towards the end of the year.

Vietnam’s gross domestic product (GDP) dropped from 7.45 percent in the first quarter of 2018 to 6.79 percent in the second quarter. The country’s first-half growth averaged 7.08 percent, which is rather high, but to secure the annual target of 6.7 percent, Dung said more efforts are necessary for the latter half of the year.

He said the growth rate should reach 6.53 percent in the third quarter and 6.36 percent in the fourth quarter to guarantee the Government’s annual growth target.

Concerning inflation, the minister said that the consumer price index (CPI) continuously increased in May (0.55 percent) and June (0.61 percent) which raised concerns about the feasibility of keeping the inflation rate below 4 percent by year-end.

Therefore, he emphasized the need to implement price stabilisation and economic adjustment measures, especially when there are typically two strong price increases at the start of the new school year (in September) and in the last month of the year.

In addition, there is the possibility that a trade war will break out, which could bring both challenges and opportunities for Vietnam, Dung said.

Vietnam is not targeted in this war, so the country can take advantage of the opportunity to increase imports and exports, according to Dung. However, global instability will create competition between economies, which will have a significant impact on developing countries, including Vietnam.

"So we need to keep a close watch on the opportunities and challenges of the war," the minister said.-VNS/VNA