Sometimes, because we are at the center of a crisis, we get caught up in the daily flow of information. When we come out of the crisis, we realize that we often pay too much attention to unimportant things and ignore the vital factors.
Around this time last year, the focus was on the stock market, with concerns that a sharp drop in the index would have a negative impact on the economy. Many government officials tried to reassure the public, sometimes saying that stock prices had hit rock bottom and that buying would be profitable; other times discussing using the state budget to bail out the stock market.
“Symptoms of crisis”
Certainly, the stock market is closely related to the health of the economy, and the market decline has had huge consequences for many businesses and investors until now. But the economic crisis at the beginning of last year had no causal relationship with stock market prices – it was just an external manifestation of diseases that were later fully diagnosed: the rapid growth of total means of payment and credit leading to inflation, rampant investment, including financial investment, trade deficit, and exchange rate fluctuations. In the second half of last year, almost no one mentioned the stock market in relation to solutions to revive the economy.
Likewise, there are concerns that seem to be closely related to the global economic crisis affecting Vietnam, but they are just external symptoms. The price of gold is an example. The price of gold is currently fluctuating abnormally, mainly due to speculators seeking to profit from the crisis. There is no need to overemphasize these fluctuations, which can cause people to suffer unnecessary losses, except for those who trade gold online - a form of gambling that is no more or less betting on the rise and fall of the price of gold, no different from betting on whether it will rain or shine tomorrow.
Treat symptoms
Without a sober outlook, beyond the symptoms of the current crisis, it is easy to repeat policy mistakes and then it is very likely that the world will escape the crisis and we will return to face the economic difficulties of last year.
The symptoms that are emerging now are that exports are decreasing and are likely to decrease even more sharply, industrial production is increasing very slowly, even decreasing quite sharply in the State sector, unemployment is high, consumption of goods is slowing down... In that context, it is very easy to introduce policies to solve the situation in order to increase production capacity. And when implementing, it is very easy to go back, using growth measures that we had to spend a lot of effort to identify as the culprits causing difficulties for the economy last year. That is to let credit increase too quickly, to produce regardless of consumption, to pour money into state economic groups, maybe now not to invest widely but to maintain the existence of ineffective projects...
The current global economic crisis has changed many business models. If we do not recognize this shift, we will only be struggling with short-term solutions. Instead of focusing on businesses as a place to solve difficulties, let them feel the changes taking place in the market and find ways to adapt. The strength of the private enterprise sector in Vietnam is its flexibility, changing tactics and strategies very quickly to respond to new situations. The rapid and strong penetration into the US market after the signing of the bilateral trade agreement or even taking advantage of the stock market last year and the year before proves that. The ones that will survive the crisis will be mature, visionary, and courageous businesses; while those businesses that only know how to rely on relationships to get rich, even if they go bankrupt, will still be a good thing for the economy.
Therefore, the most feasible policy at present is to focus on agriculture, supporting farmers because they will be the mainstay of the entire economy if difficulties continue. Using the budget to invest in projects that are truly necessary for society is also the most direct way to stimulate demand, while screening enterprises with real capacity to receive projects and create jobs for workers who have lost their jobs from weak enterprises. It is worth mentioning that Vietnam's administrative capacity is still very weak, so stimulating demand through state-owned corporations is always the first choice because it is easy to implement. Directly stimulating demand for the people requires a much more flexible, energetic and impartial apparatus. Effective rural policies across the country are the same, requiring great determination from leaders and unity of the administrative apparatus for rapid and widespread implementation.
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