500 WordsApr 9, 20132 Pages
Globalization era seems to have surfaced some of the prominent challenges being faced by the world of interdependent economies. The economies around the world seem to be facing the domino effect- one big blow to the economy of one nation leads to a string of chain reaction, and the latest victim appears to be Vietnam. Until a few years ago, it was one of the world’s hottest emerging markets with a GDP growth rate soaring nearly to 8%. Like other developing economies especially in Asia Vietnam had its own share of pie- a boom in property and investments. But today, the growth engine is stalled with the country’s banking system slowly falling apart. There have been rumors that Vietnam is seeking an International Monetary Fund bailout for its banking system. The problem lies, in the bad loans given to many inefficient state-owned companies which are not being paid off. This results in making the banks reluctant to further lend and thus leaving companies without money to invest further for the growth of the economy. This situation is like a vicious circle that has brought its growth rate down to approx 4% in 2012. Though the rumors of a weak banking system has been put off by the Govt. and also by IMF spokesperson but fear continues to linger due to the various stalled construction projects across big cities in Vietnam, price cuts by various real –estate developers all indicating towards a property slump. According to economists, Vietnam has entered into a dangerous cycle where banks, having huge bad debts are reluctant to lend or have high interest rates, making it difficult for businesses to invest and earn to pay back their loans, ultimately harming and leaving banks with no money. Moreover such situations result in multiple affects like unemployment etc. This crisis has been acknowledged by the leaders as well. The Prime Minister, Nguyen Tan Dung, has approved

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