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IMPACT OF FINANCIAL CRISIS ON VIETNAM’S

ECONOMY

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MACROECONOMIC INDICATORS (1)

The more integrated into the world economy, the more Vietnam’s economy affected by the up and down in the world economy.

GDP declines: 2007: 8,4%; 2008 6,5%; 2009: 4,5% - 48%

High inflation (2006: 6%; 2007: 12%, 2008: 23%)

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MACROECONOMIC INDICATORS (2)

VN Index was slashed by more 50%.

Increasing trade deficit.

Unemployment is high (more than 300.000 at the end 2009)

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FINANCIAL CRISIS AND STABILITY

What are the threats to peace and stability?Vietnam Government emphasizes on non- traditional security problems: Food, energy, financial security Poverty Inequality

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GOVERNMENT MEASURES(1)

Vietnam Government approved a stimulus program of $ 6 billion.

Stimulus measures are aimed at subsidizing/compensating interest rates for enterprises.

Develop infrastructure .

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GOVERNMENT MEASURES(2)

Helping low income families Providing Financial assistance for

unemployment Encouraging companies to look for new

export markets

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GOVERNMENT MEASURES(3)

Encouraging companies to buy equipment, machines, technology for post crisis business.

Looking for Foreign Direct Investment. Stimulus program gives a positive result. GDP in the first quarter increased by 3,1%;

exports rose by 2,4%, trade deficit declined.

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WHAT SHOULD WE DO TO COPE WITH FINANCIAL

CRISIS AT REGIONAL LEVEL?

Standing aside and hoping the problem goes away is not a

good idea.

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RECOMMEDATIONS(1)

1/ Increasing the active role of regional governments as a market stimulator and supervisor.

2/ Enhancing intra - trade in Asia, reducing the impact of the slowdown in US/EU demand on Asian exports.

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RECOMMEDATIONS(1)

3/ Reducing the dependence of Asian Economies on US dollar (in the context of dollar volatility): Multilateralization, Asian Currency Cooperation.

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RECOMMEDATIONS(1)

4/ Improving regional financial surveillance mechanisms (an early surveillance, legal framework, risk management skills and policy coordination) as well as risk pricing capacity

5/ Finding new channels to help enterprises to cope with the current drying-up of liquidity.