Deputy Prime Minister Vuong Dinh Hue revealed the concern at a meeting in mid-June, where he expected scientists and economists to make recommendations on the issue.Vu Thanh Tu Anh from the Fulbright Economics Teaching Program in Ho Chi Minh City, said that Vietnam had a macroeconomic stability, but it saw a macroeconomic instability every 10 years in 1979, 1989, 1999 and the latest in 2009.
It meant that a warning should be taken as 2019 will be the return of a ‘10-year crisis’ as historic cycles show.
Meanwhile, Anh stressed that Vietnam gets small benefits and advantages from the large opening of the economy. The link between FDI and domestic sectors is not good, leading to unsustainable growth platforms.
Vietnam is currently the second most trade-dependent economy in Southeast Asia
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International financial institutions, such as the World Bank, Asian Development Bank or Fitch, recently also mentioned to some external risks that can make adverse impacts on Vietnam’s economy.
In addition to positive factors, Sebastian Eckardt, lead economist of the World Bank in Vietnam, pointed out that with a highly open economy, Vietnam is likely to be exposed to external factors, such as trade wars, high oil prices or geopolitical instability.
In addition, tightened monetary policies of central banks will also have a great impact on the world’s economy and of course, Vietnam is not out of the influence, he said.
Making the same move, aside from highlighting Vietnam’s strong growth potential, the ADB underlined several major risks to its positive outlook, including the rise in global trade protectionism, as the country’s annual trade now exceeds 185% of GDP.
Vietnam is currently the second most trade-dependent economy in Southeast Asia, behind Singapore.
Aaron Batten, an ADB senior economist, said the trade dispute between China and the US, Vietnam’s two major trading partners, has the potential to spill over into trade distortions for Vietnam.
No sign of crisis, but caution needed
"I have not seen any signs of an economic crisis, either in the world economy or in Vietnam," Can Van Luc, chief economist of the Bank for Investment and Development of Vietnam, said, adding that the current macro indicators of both the global and Vietnamese economy are good.
In addition, both the world and Vietnam have had a lot of experience dealing with economic shocks, especially in real estate, securities and financial markets, Luc said.
Precautionary tools to create a buffer for risk prevention in Vietnam are also strong. For example, the country’s foreign exchange reserves are good while the real estate and securities markets are also healthier and have no sign of bubble, Luc said.
Sharing the same opinion, economist Le Dinh An said that the world and Vietnamese economies are still in a period of recovery so that the possibility of crisis is unlikely, at least in the next 1-2 years, even if a trade war happens.
However, the experts said that a warning about the crisis is necessary to timely make suitable policy adjustments as the global and Vietnamese economies are still facing many difficulties, challenges and risks.
Warnings are never superfluous, especially when Vietnam’s exchange rate and inflation can be under larger pressure if the US Federal Reserve (Fed) continues hiking interest rate this year, An noted.
