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Mon, Oct 27, 2008 - Page 10 News List

Financial turmoil threatens Vietnamese poor


Farmers do extra handicraft work next to a rice field in a suburb of Hanoi on Sept. 9. Stubborn double-digit inflation and shocks from the global financial turmoil threaten to plunge Vietnamese households living on the margins back into dire poverty, the UN country chief warned on Friday.


Double-digit inflation and shocks from the global financial turmoil threaten to plunge Vietnamese households living on the margins back into dire poverty, the UN has warned.

Despite Vietnam’s economic boom of recent years, many groups remain vulnerable to food shortages — especially landless farmers, the urban poor and ethnic minority groups — UN resident coordinator John Hendra said.

While global commodity and energy prices have dropped back from their peaks this year, Vietnam’s inflation, although falling, still stood at 26.7 percent this month, squeezing the family budgets of the most marginalized groups.

On top of soaring consumer prices, Hendra said, the global financial crisis will likely impact Vietnam’s export-driven economy.

“Taken together, these economic challenges threaten to derail Vietnam’s progress in reducing poverty,” he said in a televised national address on Friday.

UN data showed that “less money is available to many Vietnamese households, especially poorer ones and there is a real risk some families could fall back below the poverty line, while those already there need additional help,” he said.

“Poorer women and children are particularly at risk since higher food prices can worsen their already precarious nutritional status,” he said.

Vietnam, which launched its doi moi (renewal or renovation) market reforms in the late 1980s, has seen more than a decade of economic growth above 7.5 percent, lifting tens of millions out of poverty.

The developing country of 86 million joined the WTO early last year and hopes to soon become a middle-income nation with annual GDP of US$1,000 per capita.

However, over the past year, Vietnam’s overheating economy has been hit by double-digit inflation and other economic woes. Especially high food and gasoline prices have hit the poor the hardest and fuelled social discontent.

Vietnam, the world’s No. 2 rice exporter, does not face overall food shortages, Hendra stressed in a separate speech last week.

But he warned that, while some farmers had benefited from high global food prices, more than half of Vietnamese households are net buyers of food and have seen their real purchasing power reduced.

Groups including low-skilled and landless rural workers and the elderly “are not only temporarily worse off but also challenged in their long-term ability to secure adequate intakes of food,” Hendra said.

Ethnic minorities faced the greatest risk, including in the Central Highlands and northwestern mountains, which already face “high poverty and moderate to severe stunting rates among children under five years.”

To address the problem, Hendra recommended that Vietnam strengthen its social security programs and its data collection on poverty to more precisely and quickly identify and help the most vulnerable groups.

He also warned of long-term threats to food security in industrializing Vietnam as agricultural areas face pressure from “a growing demand for land for industrial, residential, tourist and leisure purposes.”

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