Experts at the conference Vietnam Economy 2010 in Hanoi on Thursday said that with the increasing openness for a transitional Vietnam, the country will be vulnerable to global changes such as unstable recovery and price volatility.

Professor Vo Dai Luoc of the Institute for World Economy and Politics suggested that Vietnam closely watch global changes for a timely response if the country is to minimize negative impacts.

“Changes in the global economy will have quick and deep impacts on Vietnam in terms of trade and investment as the local economy has been opened wider – with foreign trade equivalent to 150-160% of the national GDP and foreign direct investment accounting for 30-40% of the overall investment,” he said.

The economics expert warned that anti-recession measures taken last year would result in bad impacts in 2010. He cited as the biggest risk high inflation due to monetary policy loosening and inefficient public investment last year, as well as high fuel prices.

While last year’s budget deficit amounted to 7% of GDP, the situation this year will remain unchanged due to possible hiccups occurring to the economic recovery, he said. Luoc also called for greater attention to the trade deficit, which would likely continue the rising trend in the absence of efficient countermeasures.

Vietnam last year recorded a GDP growth rate of 5.32% while the global economy was in recession. Experts at the conference agreed that the country would witness higher economic growth this year, but the rate would depend on what target the Government opts for.

Le Dinh An, director of the National Center for Economic Information and Forecasting, said it would depend on whether the Government targets the growth rate or the growth quality, and there are two scenarios for growth in 2010.

If the Government seeks to restructure the economy and improve the quality of growth, then the GDP this year should expand by between 6% and 6.5%, with agriculture increasing by 3-3.2%, manufacturing-construction by 6-6.5%, and the service sector by 7.1-7.9%.

Under this scenario, the overall investment should be equivalent to 40% of the GDP, with less capital from the State budget and higher contributions from other private sources.

Meanwhile, if the Government pursues higher growth, then the rate may hit 7%, which will require higher Government spending. Under this scenario, the overall investment will account for 42% of GDP, or some VND835 trillion, An said.

Source Sai Gon Times