The Predicted Global Recession: Will Vietnam Prepare For Such A Scenario?

Vietnam's GDP grew by 6.81 percent in 2017

Other economists have also given predictions, saying that institutions, banks, governments and even museums would be affected.

In Vietnam, Pham Chi Lan, a renowned economist, has warned that a recession has occurred every 10 years in the past, and that signs of recession have become clearer. The last global recession was in 2008. 

To minimize the negative impacts on the national economy if recession occurs, Lan said it is necessary to reform certain state functions.

The 2017 reform brought some achievements, but too many questions still exist, he said. 

Why hasn't the state distinguished between “business conditions” and professional management over the last 30 years? Why did the Ministry of Health have to ask for help from the Central Institute for Economic Management (CIEM) and 10 associations to change regulations on inter-ministerial goods examination? What is the governance capacity of the healthcare sector?

Lan said that the Prime Minister still has to “run after” ministries to ask them to cut the number of business conditions, or ‘sub-licenses’, as they are called.

“Ministries and branches, in the name of state management, have given rights to themselves and set up unreasonable requirements,” Lan said. “The existing problems of the economy won’t be settled if the function of the state apparatus is not re-defined.”

Vietnam will not see better growth in 2018 if ministries are too optimistic about the achievements of the 2017 reform. The reform process will slow down or even stop if the heads of the ministries are satisfied with the plans to cut the number of sublicenses, and do not pay attention to enforcement, she said.

Vietnam began cutting unnecessary business conditions in 1999, but more and more new business conditions continued. 

An analyst estimated that there were 400 business conditions in the past, while the figure is now 5,700.

Another big concern, according to the analyst, is the increase in the number of dissolved businesses. There were 17,132 businesses dissolved in the first two months of 2018, up by 4.5 percent over the same period last year.

In 2017, Vietnam’s GDP grew by 6.81 percent, a six-year high, surpassing the initial target of 6.7 percent. Following the success, the Government targets the 6.7 percent GDP growth rate in 2018.

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Mai Thanh