Asian Development Bank (ADB) governors discussed ways to overcome major global challenges such as high inflation, climate change and food security on the last day of their 44th annual meeting in Ha Noi yesterday.
Rajat Nag, the ADB managing director general, suggested ways to help Viet Nam curb inflation and avoid the middle-income trap in an interview with Viet Nam News on the sidelines of the meeting.
Measures to avoid middle-income trap:
– Implementing the adopted socio-economic development plan.
– Continuing to deal with the issue of inequality so that everyone in society can participate in the process of growth.
– Having good governance, including fighting corruption.
– Making sure growth goes with environmental sustainability.
Reasons behind inflation:
There are supply constraints in Viet Nam because the country has grown rapidly. While demand has increased because of economic growth, production capacity did not keep pace so there have been supply constraints. And of course capital inflows are another reason. The mismatch between supply and demand has also driven up inflation. Another major cause has been the high cost of food and global oil price hikes. Inefficiency in the distribution system has also led to inflation.
Comments on Government measures to curb inflation:
The Government has adopted Resolution 11, a solution package. It not only includes tightening monetary policy but also tackling fiscal issues. The Government is looking to increase efficiency of State-owned enterprises to reduce transaction costs. These things take time to implement. The critical thing about inflation in Viet Nam is that it is related to supply sources. Steps Viet Nam take to increase productivity, production and supply sources are vital but will take time. — VNS
Rising food and fuel prices and the accompanying inflationary pressures were threatening economic recovery, dampening growth and adversely affecting poverty-reduction programmes, said Haruhiko Kuroda, the ADB president.
"Many developing countries in the region are lagging behind in achieving the non-income Millennium Development Goals. Growing inequalities are also of serious concern; left unchecked, these inequalities can destabilise the region and stunt its future growth," he said.
"There is wide agreement that the emphasis must continue to be on inclusive, environmentally sustainable and balanced growth. As many governors noted, investment in quality public services – infrastructure, education, and social safety nets – is essential to bridge the gap between those countries and citizens who are prospering and those being left behind," he added.
"Investment in green growth – particularly in clean and renewable energy and effective use of water resources – will help make growth environmentally sustainable. The Asia-Pacific region remains highly vulnerable to climate change and natural disasters and must lead the way in addressing these major issues," he said.
The governors also agreed that Asia should look at the wider picture and focus on global economic development, especially reform of the world's monetary system, contributing to sustainable stability and balancing the financial system.
Nguyen Van Giau, governor of the State Bank of Viet Nam, said economic growth in Asia, especially after the recent global financial crisis, was evidence of Asia's dynamism.
"The fast recovery of the region also reflects successful reforms and restructuring efforts of member countries since the crisis of 1997-98," he said.
Participants said they hoped the ADB would give greater priority to assisting member countries to develop their infrastructure, deal with growth bottlenecks, mitigate the effects of climate change and promote the private sector, while supporting growth and the restructuring of economies.
The 2012 meeting is scheduled to take place in Manila. —VNS