Nehru said the world is now in the most serious financial crisis in history, which is affecting even countries with good management capability. However, Vietnam has taken suitable measures to deal with difficulties and stabilize its economy.
While East Asian countries have entered the current crisis substantially better prepared than they were for the 1997 Asian financial crisis, none have been spared the full fury of the global economic storm, says the WB’s latest six-month assessment of the East Asia and Pacific region’s economic health.
The report notes that the downside risks to East Asia are substantial in the near-term, but highlights that countries will be better positioned to deal with the crisis if they are able to maintain macroeconomic stability, shift exports to faster growing regions in the world, substitute external with domestic demand, and continue with structural reforms to strengthen competitiveness.
According to the WB, economic growth in all East Asian countries, except for Malaysia and Indonesia, was slowing down before the crisis reached its peak in mid-September. Despite efforts to encourage demand in many countries, economic growth is anticipated to continue slowing down in 2009. Despite the slowdown, East Asia will contribute to approximately one-third of total global growth in 2008.
World Bank Vice President for the East Asia and Pacific region, Jim Adams, applauded East Asian governments for their swift and effective policy interventions to avert the worst impacts of the global crisis so far.
"Thanks to the quick action of policy makers from virtually every East Asian country, banking systems have been able to deal with the crisis so far and in a number of countries, economic stimulus packages are being put in place. These actions are helping East Asia to continue playing a key stabilizing role and are acting as a growth pole for the global economy," Adams said.
"Despite the difficult road ahead, those countries that sustain sound policies pursued thus far and tackle new challenges decisively will be the ones to emerge in a strengthened position when the global economy begins to recover," said Nehru.
With regards to Vietnam, Nehru said Vietnam has had an outstanding economic development period. In the difficult situation, the country had suitable measures to stabilize its economy.
In Hanoi, the WB Acting Country Director, Martin Rama, said the global economic downturn would hit Vietnam but at slower pace than other economies. But the expert emphasized that Vietnam needs to take flexible and quick responses to possible impacts.
Vietnam is perceived as reacting well to the crisis with its impressive performance this year, demonstrating the resilience of its economy, Rama said.
The growth of the economies of developing East Asia countries will slow down to 6.7% in 2009 and 7.8% in 2010, from 8.5% in 2008, as the impact of the financial crisis reaches the region, the latest economic update of the WB said.
The WB’s report forecasted approximately a 6.5% economic growth rate for Vietnam in 2009, which is similar to the Vietnamese Government’s goal. However, Martin Rama said that the figure may be closer to 6% or just over.
Related to the Vietnamese Government’s $1 billion package to stimulate production and consumption, the WB said the spending may increase. Rama said the most important thing for Vietnam is that it has to “take this opportunity to perform financial reforms.”
The report warns that the region’s most vulnerable countries are those with more open capital accounts, large non-resident holdings of equities, and a strong reliance on foreign portfolio investment. According to WB, the outside capital flow accounted for 30% of Vietnam’s GDP in 2006.
Poverty rates are likely to fall further in 2009, declining to 10.68 percent for developing East Asia as a whole, compared with the 10.36 percent projected earlier this year. While the number of poor people in the region will continue to decline, an estimated 5.6 million more people would have emerged from poverty next year if not for the slump.
Developing East Asia includes China, Indonesia, the Philippines, Thailand, Vietnam, Cambodia, Lao, Mongolia, Papua New Guinea and the island economies of the Pacific.
Source: VNN
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