US recession hits global economy, Vietnam may avoid large losses

As Vietnam has become increasingly integrated into the global economy, it will become more susceptible to worldwide economic shifts, including the most recent possibility of an international recession; however, the influence will not as major as players deeply intertwined with major market motivators.

Global impact

“The US economy is one shock away from a recession,” US investment bank Lehman Brothers commented late yesterday, January 22.

Other experts share the same view, especially after the world’s stock markets plummeted yesterday.

In Europe, the DAX index dropped by 194.41 points (2.86%), the FTSE 100 dropped by 27.3 points (0.49%), and the CAC 40 fell by 48.67 points (1.03%).

In Asia, the Hang Seng Index fell 2,061.23 points (8.65%), Strait Times down by 72.85 points (2.5%) and Nikkei 225 dropped by 752.89 points (5.65%).

The main US indexes also witnessed sharp falls yesterday with the lowest decrease at 3.5%.

Lehman Brothers thinks that 40% of the US economy will fall into recession but the situation can be improved if the US FED takes strong preventative actions.

In the latest news, the FED decided to cut short-term deposit interest rates by 0.75% from 4.25% to 3.5%, the sharpest since September 11, 2001.

Vietnam may avoid drastic impacts

Experts say Vietnam may suffer from a global economic recession as global integration depends.

Vietnam’s stock market witnessed another lackluster day yesterday, as prices of all shares continued to fall, though listed companies announced satisfactory business results. Analysts say investors are fleeing the market because they fear a global recession may adversely impact Vietnam.

The VN Index fell to 807.74 points, the lowest since January 5, 2007.

However, the World Bank thinks the US’ problems will not influence Vietnam too much.

A recent report by the WB forecast that the global growth rate will be 3.3% in 2008, a bit lower than 2007’s 3.6%.

The report also said that if the US economy falls into a serious recession, this may further dampen growth in developing countries, including Vietnam.

The Asia Pacific region is thought to achieve a GDP growth rate of 9.8% in 2008, and 9.6% in 2009, while Vietnam is expected to see growth rates of 8.2% and 8.3% for 2008 and 2009, respectively.

International press agencies have also quoted economists who say that as Asian economies do not largely depend on the US, they will not suffer much from a US recession.

Japan, which is a main exporter to North America, will suffer most from the recession, while China will also see adverse effects as it is striving to increase exports to the US. (VNN)