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macroeconomic stability

Key issues to consider

Rapid economic growth would play a crucial role in helping Vietnam escape the middle-income trap, narrow the gap with advanced countries, and move toward the goal of becoming a high-income economy within the next two decades. However, alongside the goal of fast growth, we must be highly vigilant and proactively address the potential downsides this process may bring. Many lessons from other countries have shown that unsustainable growth can leave long-lasting consequences and even slow down the very process of development. Risks of macroeconomic instability and asset bubbles Excessively rapid economic growth may carry serious macroeconomic risks, particularly macroeconomic instability, high inflation, asset bubbles, rising public debt, and the threat of unsustainable growth. As the economy expands quickly, investment and spending demands will also surge, creating significant inflationary pressure on the demand side, putting a strain on currency depreciation, and increasing the nation’s external debt burden. Lack of control and poor investment direction could lead to widespread and unfocused investment, reducing the efficiency of resource use. When businesses and localities compete to meet growth targets, capital may be allocated in an unstrategic manner, resulting in many inefficient and wasteful projects. As a result, numerous industrial zones, infrastructure projects, and new […]
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