Like all countries, Vietnam has fallen victim to the global financial crisis. This has lead to both economic and social problems. Foremost amongst these are the worsening of the trade deficit, the decrease in capital inflows and the rise of unemployment. I intend to address each of these issues in turn.Falling victim to global financial crisis like all other countries, Vietnam is facing many economic and social problems, of which the increase in trade deficit, the drop in capital inflow and the big number of unemployment are the most remarkable.
Firstly, Vietnam's trade deficit with the rest of the world is increasing. Its main trading partners, the US, Japan and Australia, are themselves in deep recession. This has resulted in a reduced demand for our exports which has not been matched by a corresponding drop in our imports. Whenever imports exceed exports a deficit must occur. According to the Ministry of Industry and Trade, exports of agricultural products are down 30% on the same period last year.First of all, the increasing deficit in trade is taking place in Vietnam. Because many main trading partners like the U.S, Japan and Australia are in deep recession, their demands for our exports are minimal. Meanwhile, their supplies of imports to our country will go up as they are finding ways to extend their activities into other markets. Therefore, export is falling significantly wheares import much less. According to Ministry of Industry and Trade, most agricultural products have dropped by about 30% in export compared to the same period last year.
Secondly, Vietnam is suffering from the unavailability of international investment capital leading to higher borrowing costs. Foreign investment has been 'put on hold' as they wait to see if markets will recover. The FDI projects in particular are experiencing difficulties in obtaining funding.Second, Vietnam is bearing the rapid drop in capital inflow from abroad. With the expensive captical cost and narrowed export market, a lot of foreign investors in Vietnam are more cautious now to see whether to slow down, cancel or continue with the project in the next year. In addition, investment projects in general and FDI project in particular are experiencing difficulties, thus making loan agreements unsigned or unable to be provided with money.
Finally, there is the gradual rise in unemployment. Some businesses, especially those backed by foreign investment, have shed labor, or even closed down entirely. The Ministry of Labor, Disabilities and Social Affairs estimates that unemployment numbers will increase by 300,000 during 2009. It is expected that some of the 900,000 Vietnamese currently working abroad will also lose their jobs and seek to return exacerbating this problem.Finally, there has been a gradually rise in unemployment in Vietnam. Lacking capital, some enterprises, especially those with foreign investment, have had to curtail expenses maximally or even to close down. Ministry of Labor – Invalids and Social Affairs predict the possibility of about 300,000 redundancies and unemployed workers in 2009. 900,000 Vietnamese laborers working abroad are threatened with the sack as well.
In conclusion, the effects of the global credit crisis are having an extremely serious effect on the economy. We need to take immediate action to mitigate its effects and thus minimize both the duration and depth of the current recession.In conclusion, the effects of global credit crisis are extremely serious. We have to take actions immediately to restrict these effects as much as possible and quickly pull Vietnam out of this recession.