Vietnam's gross domestic product (GDP) growth is expected to be just 0.3 percent this year, down from around 6.2 percent in 2008, according to British research and advisory firm Economist Intelligence Unit.
But, in the context of the global economic recession, it is not very serious compared with other countries in the region, said Justin Wood, director of Corporate Network and Southeast Asia expert at the London-headquartered Economist Intelligence Unit.
"I think if you look at the regional context in Asia, it is actually not that bad," given a serious global recession, he said, presenting data that showed China, India and Indonesia as the only other regional economies seen expanding this year.
Wood was speaking to reporters Monday ahead of a two-day conference of business and government leaders to discuss Vietnam's development.
He said global economic growth is estimated at only 2 percent.
"Demand for Vietnam's exports will be hit sharply by the downturn, and tourism will suffer. Banks will face liquidity constraints and be more cautious in the current environment, hurting the supply of credit to the economy," he said.
"Inward remittances from overseas Vietnamese will be hit, as will foreign direct investment, which will fall by around 70 percent in 2009. Property markets in the major cities of Vietnam have already fallen hard, and the number of unemployed will almost double this year," Wood added.
The country's three biggest export markets, the EU, the US and Japan, are expected to see economic declines this year, hitting its exports.
This would increase the unemployment rate to 8.2 percent, he said, from 4.7 percent last year.
"An environment such as this puts pressure on the government, not only to navigate the downturn, but also to maintain social harmony. The temptation to veer away from ongoing economic reforms may grow, especially as business parties with vested interests feel the full force of the downturn," Wood said.
Equally, though, the government must not lose sight of the longer-term challenges in Vietnam, namely upgrading infrastructure, stamping out corruption and improving the policies and institutions that oversee the country's economy and financial system, he said.
The two-day Business Roundtable with the Government of Vietnam 2009 will open in Hanoi today.
Business leaders from Vietnam and abroad will meet with top government officials to discuss the impact of the global crisis on the country and the administration's response, as well as the country's longer-term path.
Prime Minister Nguyen Tan Dung, who is to address the conference today, was quoted last month as saying Vietnam's economic slowdown would end by May.