Old growth model may not work for VN: Economic Policy Expert
As published in Tuoi Tre Newspaper on 19/07/2012
Dr. Michaela Prokop, Policy Advisor in Economics under the United Nations Development Program (UNDP) in Vietnam, shared her personal observations on the local economy with Tuoi Tre.
Fiscal austerity measures, particularly in the euro zone countries, have had an adverse impact on aggregate demand and economic growth. Lower economic growth and public revenues reduce the fiscal space of countries to invest in job creation and in measures, which could address some of the underlying structural weaknesses. This has enormous social costs with unemployment, particularly youth unemployment, reaching unprecedented levels in countries most affected by the crisis such as Greece or Spain. It also undermines fiscal consolidation in the longer term. Vietnam faces similar but also quite different challenges. While growth in the euro zone has been stagnant for several years and inflation consistently low, Vietnam’s growth remained robust even during the international financial crisis. This has been partly due to the Government's growth stimulating policies. These policies, however, have also contributed to macroeconomic vulnerabilities, particularly high inflation. With the introduction and implementation of Resolution 11 the government began to focus more on - and to a large extent succeeded in - stabilizing the economy.