Economic difficulties may affect the financial sector ?

	Việt Nam’s economic growth driven by good recovery of sectors: WB
	Capital disbursement for the economic recovery program has been actively implemented
	Action programme on economic restructuring for 2021-2025 issued

According to experts at the conference, fiscal policy must be considered the most important supportive policy.

The National Economics University coordinated with the Central Economic Commission and the National Assembly's Economic Committee on April 25 in Hanoi to hold a national scientific conference titled "Vietnam's economic overview in 2021 and outlook for 2022: Macro-economic stability and financial soundness amid the Covid-19 pandemic", and the publication of the annual Vietnam Economic Review 2021.

Prof. Dr. Pham Hong Chuong, Rector of National Economics University, said in 2021, Vietnam’s economy witnessed unprecedented difficulties and challenges. Meanwhile, an important driver for growth support is public investment, which did not make a breakthrough.

On the supply side, the production of important industries was greatly affected such as transportation and warehousing; tourism, accommodation; education; and the manufacturing industry due to a sharp drop in demand and a surge in production costs.

“Macroeconomic and financial stability risks are increasing. Expected inflation increases due to cost-push factors and prolonged monetary policy easing. Fiscal policy space is narrower. Besides, money supply growth and credit growth were not much lower than those in last year, regardless of a sharp increase in corporate bond issuance during 2021,” Prof. Pham Hong Chuong said.

Assoc. Prof. Dr. To Trung Thanh, Head of the Department of Scientific Management, National Economics University, said in the past two years, Vietnam's economy was operating far below its potential output, which means that the economy is showing signs of entering a downtrend.

When economic growth is below potential, resources are not used efficiently while money supply and credit are very high (as a ratio to GDP), this will put great pressure on inflation and macro risks in the medium and long term.

"The economic difficulties may eventually affect the financial sector," he stressed.

Talking about the economic outlook in 2022, the experts said facing the new pandemic situation and new economic recovery packages, Vietnam's economic growth can reach the target of 6-6.5%. But, there are still risks of instability.

For example, regarding the conflict between Russia and Ukraine, the report stated that this conflict has increased the prices of many common goods, including oil, gas, metals and food and affected the global supply chain; thereby increasing tension in financial markets.

Therefore, Assoc .Prof. Dr. To Trung Thanh said the Government's policies should focus on how to recover and develop the economy in a sustainable way in the context of "living with Covid-19". In which, fiscal policy must be considered the most important supportive policy. In particular, it is necessary to focus on transferring credit flows into the manufacturing sector and the real economy, strictly controlling growth in asset markets.

Regarding support for businesses, policies need to be more targeted and practical. The fiscal support level should be directed towards a stronger corporate sector, especially those that have large spillover effects on the economy.

Taking initiative in capital sources for production and business recovery

“Policy is effective only when public investment spending is effective. The efficiency of public spending will be a decisive factor in the sustainability of public debt. Therefore, it is necessary to reform the public investment institutions and improve the efficiency of public investment, ensure quick disbursement but effective, avoiding waste and loss,” said Assoc. Prof. Dr. To Trung Thanh.