The Government’s Resolution 11 was issued on February 24 this year to tame inflation and stabilize the macro economy. The Saigon Times Daily had an email talk with Professor David Dapice, a professor of economics at Tufts University and an economist with the Vietnam Program at Harvard University’s John F. Kennedy School of Government, over the Government move.
The Saigon Times Daily: Do you think the new package of measures under Resolution 11 will eventually bear fruit?
Professor David Dapice: The problem is not if the February measures (Resolution 11) will work, but how long it will be kept in place. Recent growth has been driven by SOE (State-owned enterprise) and real estate investment, both of which rely on rapid credit growth. If a real slowdown emerges, it is likely that there will be fierce pressures to reignite credit growth again and if that happened, then inflation would return. This is one reason why confidence in the dong is not very high. The other reason is that the growth strategy relies more on high investment than efficiency, and it may be difficult to maintain high levels of investment as saving is only moderate.