Vietnam's Economy is suddenly looking up ...

April 12, 2011

Vietnam changes course

By David Brown

Snips ~

_Those who wrote off Vietnam's economic management as hopelessly sclerotic during January's 11th Communist Party Congress would be wise to take a second look. Though inflation in is on the rise, Vietnam's economy is suddenly looking up.

_Held every five years, the party conclave sorts out the pecking order of the Vietnamese political elite. Finding the congress a yawner, many reporters turned their attention to criticizing the Hanoi government's economic management, echoing notes sounded the previous month by the Wall Street Journal.

_Unable to shake their fixation on "growth at any price", feckless policymakers had triggered runaway inflation, the Journal had opined. Vietnam's economy was in the bucket and prospects were dim that the congress had changed anything, according to many reporters' assessment.

_But in fact, much has changed. Buoyed by a fresh mandate for a second five-year term, Prime Minister Nguyen Tan Dung has sharply tightened credit, reined in state spending and begun to wring out inflationary expectations. Additionally, Dung has served notice that the government is going to impose discipline and economic sense on the nation's investment decision-making.

_To be sure, Vietnam's government does not lack for advice on macroeconomic strategy. It gets plenty of it from the Asian Development Bank (ADB), the International Monetary Fund (IMF), Japanese growth guru Kenichi Ohno and a platoon of Harvard University professors as well as from its own economists.

Prescriptions vary in detail but all agree that unless Hanoi makes radical changes to its development model, growth is doomed to slow and perhaps stall as Vietnam falls into a so-called "middle income trap".

Read full article @ http://www.atimes.com/atimes/Southeast_Asia/MD12Ae01.html