UN expert calls for Vietnam to return to pre-crisis policy

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Policy interventions during the economic crisis have exacerbated Vietnam's macroeconomic imbalances and the country needs to return to its pre-crisis stance, said an advisor to a United Nations agency .

Pumping government support into the Vietnamese economy has expanded trade deficits, increased inflation level and put pressure on the exchange rate, said Alex Warren-Rodriguez, Economic Policy Advisor at the United Nations Development Program Vietnam.

"All of the above issues call for a return to the "˜normality' of the pre-crisis policy mode or policy stance," he said at a conference in Hanoi last week.

"The government has clearly signaled its intent to pursue such a path, and has actually been doing so since late 2009. This has been especially the case on the monetary and financial fronts," Warren-Rodriguez said.

"In my view, the government needs to continue pursuing this policy stance. It also needs to pave the way for the gradual consolidation of its fiscal position, and to do so in a way that does not undermine social policy interventions in areas such as health, education or social protection."

Warren-Rodriguez said Vietnam's overall socioeconomic performance during 2009 and during the first quarter of 2010 was "generally good, especially considering developments around the region and also globally, whilst prospects for the future are overall strong."

According to the UN Economic and Social Survey of Asia and the Pacific 2010 published earlier this month, economic growth in Vietnam has rebounded.

"In 2008, it grew at a brisk 6.2 percent"¦ The government responded with an aggressive fiscal and monetary policy, and growth in 2009 reached 5.3 percent year-on-year," the study said.

The UN said GDP growth in 2010 is forecast to remain sluggish at 5.8 percent, still much lower than the pre-crisis levels of more than 8 percent.

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