One year on from Resolution 128: an effective resolution issued at the right time

Dr Nguyễn Trí Hiếu. Photo baochinhphu.vn

Dr Nguyễn Trí Hiếu, a leading financial-banking expert, talks to the Government Portal about the significance of the Government's Resolution 128/NQ-CP after one year of enforcement.

The Government's Resolution 128/NQ-CP on safe and flexible adaption to and effective control of the COVID-19 pandemic was issued in October 2021. Its strategy is to switch from fighting COVID-19 by administrative measures to containing the pandemic while opening up, recovering and developing the socio-economy. It has been one year since the Resolution was adopted. How do you evaluate the importance of this resolution for the economy in the past year?

I think that the promulgation of Resolution 128/NQ-CP is an appropriate decision of the Government in fighting the pandemic while supporting economic development.

Việt Nam is not an exception when it comes to implementing COVID-19 prevention measures and, at the same time, opening up the economy. Almost all countries have applied the same strategies.

For example, the US government initially tightened the economy and locked down streets like Việt Nam. But the US economy was open when the vaccination coverage was expanded to a certain level among the population. It's the same in Việt Nam.

I remember in the beginning and middle of 2021, when the pandemic was at its peak, we had to suspend production and tell people to "stay where you are", which was a strong measure against the widespread virus.

However, after a period of social distancing, we realised that it was necessary to open up the economy; the lockdown could not last long.

Resolution 128 was issued at the right time last October to 'untie' the economy and ensure public health and safety.

Since then, Resolution 128 has shown its significance to the economy. From the end of 2021, the economy started to be re-opened. Economic sectors, production and business activities, and markets (such as commodity market, real estate market, import and export market and even the currency market) have resumed operation to enter a new phase of recovery.

From early 2022 until now, our economy has entered a real recovery phase. As a result, the Gross Domestic Product of the first six months reached 6.42 per cent. This figure proves that our economy has recovered strongly and surpassed many countries. In particular, we can control inflation.

This is the success of the Government thanks to the Prime Minister's administration in stabilising the macroeconomy, controlling inflation, and helping achieve a lot of growth targets in the first eight months.

However, our economy will still be affected by the global economy. Therefore, we cannot be too optimistic when the situation in the world is evolving unpredictably, with the possibility that the US economy and many others will enter recession early next year. Meanwhile, inflation shows no signs of slowing down.

What would the economy have looked like without Resolution 128?

If Resolution 128 had not been enacted and social distancing had continued, I think the economy would have entered an 'exhaustion' period within three to six months after October 2021.

Many industrial parks were closed. Workers left their hometowns. A lot of foreign investors withdrew part of their capital from Việt Nam. The Resolution was issued at the right time to recover the economy step by step.

But I also want to emphasise that Việt Nam is not an exception to this policy. On the contrary, Việt Nam has joined many other countries to untie the economy at the right time.

Looking back at the first nine months of 2022, how do you evaluate socio-economic achievements? What is your prediction for the whole year in the context of global challenges?

In the first nine months, Việt Nam is one of the countries with positive GDP growth. Therefore, I think that in the next three months, we will be able to control inflation to achieve the whole year's goals.

However, the current situation in the world is extremely complicated and unpredictable. Conflicts between Ukraine and Russia have no sign of stopping. Many countries are experiencing high inflation, including the US, which has led to many central banks around the world raising interest rates, including the US Federal Reserve.

Economic crises continue and become more serious, making financial markets fluctuate, energy markets unstable, and the monetary policies of many leading countries inconsistent. In addition, climate change and environmental pollution cause more and more damage to all countries, including Việt Nam.

In that context, Việt Nam cannot stay negligent. From now until the end of the year, the global economy will continue to sink into a crisis. The world's largest economies, like the US, will likely enter recession, so Việt Nam will also be affected. Therefore, we need to strengthen exports, find new markets and stabilise the domestic currency.

The Federal Reserve has increased interest rates by 0.75 percentage points for the third time this year, and it will likely continue to rise soon. How will it impact the Vietnamese economy? How do you assess the policy response of the Vietnamese Government?

The State Bank of Vietnam has increased the interest rate to 1 per cent. That is the operating rate, including the refinancing rate, the rediscount rate and the overnight lending rate in interbank payments.

A few days after raising the operating interest rate, the State Bank issued a document to increase the ceiling interest rate for deposits under six months from 4 per cent to 5 per cent.

I think the moves that the State Bank has made since the beginning of the year and especially in the past in the context of the complicated world economy are appropriate. When making a policy, the Vietnamese Government has carefully considered short-term benefits and difficulties in making appropriate macroeconomic decisions. In general, our country's economy is currently stable without any shock.

Fiscal policy has had positive solutions to support the economy. The Government has launched a package of VNĐ350 trillion to support the economy, including a package of VNĐ40 trillion to support 2 per cent interest rates to help small and medium-sized enterprises. However, fiscal policy and the disbursement of this support package and public investment need to be implemented more actively. VNS