VIETNAM Economists optimistic, businesses pessimistic about economy performance

Economists optimistic, businesses pessimistic about economy performance

VietNamNet Bridge – While independent economists and government officials believe that the economic downturn has “touched bottom” and the economic recovery would be seen in some more days, businesses have affirmed that the situation is still very worrying.

The inflation decrease, the higher GDP growth rate in the second quarter in comparison with the first quarter both have brought a high hope that the toughest period of the national economy is over. Especially, the argument of the economists about a bright prospect of the national economy has been consolidated by the upward trend of the industrial production index and the inventory index.

The Hong Kong Shanghai Banking Corporation HSBC, in its latest report, also has noted that Vietnam’s economy growth may speed up in the last six months of the year, a signal that shows that the worst thing has been left behind.

The inflation rate in June 2012 decreased to 6.9 percent in comparison with the same period of the last year. The downward trend in goods and service prices has become more obvious: the prices were unchanged in May, but saw the slight decrease of 0.1 percent in June.

Especially, the food price increase has fallen from its peak at 34 percent in August 2011 in comparison with the same period of 2010 to 6.3 percent in June 2012. Meanwhile, the prices are believed to decrease further in the coming months, when the world’s oil prices have been decreasing on the low demand.

However, Vietnamese businesses are not as optimistic as the economists.

“The situation is still getting worse every day. The cement price has dropped to 60,000 dong per pack, with which, more and more cement companies would be driven to the corner,” said Mai Anh Tai, branch director of Thang Long Cement Company.

“This is not only the problem of cement producers alone, but of all construction material producers,” he said.

Garments--the important industry which makes products for export, has also been experiencing the tough days, even though the garment export turnover still increased by 8.7 percent in the first six months of the year. A lot of garment companies have been sitting idle because of no order from the foreign partners.

Agricultural production has also been facing big obstacles. The rice price in Mekong Delta has dropped to the deepest low with which farmers can earn 4 million dong from every hectare of rice fields for three months of hard working.

Ca tra (catfish), the biggest seafood export item, has seen the prices drop dramatically, thus making farmers suffer heavy loss, even though Vietnam’s ca tra exports still have been increasing. The problem is that many Vietnamese enterprises have to dump their products to get money to pay due debts.

While economists believe that the consumer price index CPI decrease of 0.26 percent in June is the good news, businessmen think that this is a sign showing the exhaustion of the inner strength of Vietnamese enterprises.

While people feel excited about the decreases in the inventory index, businessmen have pointed out that the inventories have decreased just because enterprises do not churn out products anymore, while they have to sell products at a loss to rescue their liquidity and ease the debt burden.

The industrial production value increase, in the eyes of producers, should be explained by the fact that the input costs have been increasing sharply. Therefore, they believe that there is nothing to be happy about at this moment.

Official reports show that the input material prices have increased by 13.78 percent, while the sale price index has increased by 13.41 percent only, i.e. the input cost increase was higher than the sale price increase.

Source: TBKTSG, TBKTVN

http://english.vietnamnet.vn/en/special-report/24169/economists-optimistic--businesses-pessimistic-about-economy-performance.html

This article makes me think the "thinkers" are a the glass is half full types the the "doers" are the the glass is half empty kind of folks.

Just from my experience, the "doers" are right more often than the "thinkers"