VIETNAM’S ECONOMIC OVERVIEW Political and economic reforms (Doi Moi) launched in 1986 have transformed Vietnam from one of the poorest countries in the world to a lower middle income country. Vietnam has made remarkable progress in reducing poverty. The percentage of people living in poverty dropped from almost 60% in the 1990s to under 10% today.
Vietnam’s growth rate has averaged 6.4% per year for the last decade, but it has begun to slow recently. The economic growth remains moderate and below its potential, Vietnam managed to improve its macroeconomic stabilization. Headline inflation fell from a peak of 23% in August 2011 to about 4.2% in August 2014. VIETNAM’S ECONOMIC OVERVIEW
The external sector continues to be an important engine of growth. Export value in US dollar terms is estimated to have grown by 15.9% in the first five months of 2014. Vietnam’s traditional labor-intensive manufacturing exports such as garments, footwear and furniture, continue to grow at a rapid clip Recent additions to the export basket such as hi- tech and high-value products have also maintained rapid growth. VIETNAM’S ECONOMIC OVERVIEW
The Socio-Economic Development Strategy (SEDS) 2011-2020 gives attention to structural reforms, environmental sustainability, social equity, and emerging issues of macroeconomic stability: 1.Promoting human resources/skills development. 2.Improving market institutions. 3.Infrastructure development. VIETNAM’S ECONOMIC OVERVIEW
Vietnam’s Economic Developments – December 2014 September 12, 2014, the Vietnam's portfolio consists of 47 IDA/IBRD operations and 6 stand-alone trust funds projects, with total net commitments of US$ 8,537 billion. Over the last three years, IFC’s commitment reached more than US$2 billion. MIGA Vietnam guarantee exposure level has increased from less than US$20 million prior to 2013 to US$679.5 million gross exposure level in 2014.
Vietnam’s Economic Developments – December 2014 GDP growth picked up to a relatively brisk 6.2 %(y-o-y) in the third quarter of 2014, contributing to an overall growth rate of 5.6% for the first nine months of the year. Vietnam’s economic recovery is on track Continued macroeconomic stability has helped underpin growth in Vietnam enabled government bonds to be issued on international capital markets, raising US$1 billion.
Vietnam’s Economic Developments – December 2014 In the first nine months of this year, compared to the same period last year: 1.Government revenue increased by 17% 2.Total expenditure rose by 11.5%, due largely to recurrent spending. 3.Overall public debt levels are becoming an increasing concern.
Vietnam’s Economic Developments – December 2014 Credit growth continues to come in below expectation, hampering the authorities’ efforts to carry out credit expansion to support economic growth. Credit growth continues to come in below expectation, hampering the authorities’ efforts to carry out credit expansion to support economic growth. The foreign-invested sector continues to be a significant source of growth. The performance of the domestic private sector has been more mixed, with rising number of domestic businesses have been closing or suspending operations.
Vietnam’s Economic Developments – December 2014 The Government has taken some important measures in 2014 to improve business conditions which are expected to bear fruit from next year The Government has taken some important measures in 2014 to improve business conditions which are expected to bear fruit from next year 1.Shorten the time for administrative procedures for filing taxes. 2.Reduce administrative costs. 3.Strengthen the transparency and accountability of state administrative agencies. The revised Law on Bankruptcy, the Enterprise Law and the Investment Law, are expected to improve corporate governance in enterprises and State Owned Enterprises
Vietnam’s Economic Developments – December 2014 Medium term projections reflect continued modest GDP growth and further consolidation of macroeconomic stability. The Government’s continued commitment to fiscal consolidation and debt reduction is reassuring; improving revenue collection, better controls on recurrent expenditures, and improving the efficiency of public investment.
The weak performance of the financial sector in Vietnam Due to a complex array of institutional and regulatory factors: 1.Interference by central and local authorities on the investment and credit decisions of state owned enterprises and state owned commercial banks. 2.Inadequate governance structure and risk management capacity in these institutions. 3.Connected lending in several joint-stock bank.
The weak performance of the financial sector in Vietnam 4.Poor financial reporting standards 5.Deficiencies in financial regulation and supervision. The government has announced a comprehensive reform program designed to address these problems and resolve the bad debts in the system. Accelerating the reform program remains a priority.