Positive signs in Vietnamese economy in first half of 2015

29/07/2015


While the world economy struggles to recover against the backdrop of crises, conflicts and diseases, Vietnam’s economy 2014 serves as a silver lining highlighted by numerous economic indices topping the average growth of other emerging countries in the region. Vietnam’s economy has strengthened at a gradual and sustained pace with significantly better macroeconomic indicators. The economy developed at 5.62% in 2014, inflation was kept under control, business and manufacturing sectors improve. Exports are showing positive trends.
The WB report said that in the first half of 2015 Vietnam’s economy rebounded with a GDP growth of 6.28%, the highest rate in 5 years. WB experts predict Vietnamese economic growth of 6 to 6.2%, due to the recovery of domestic demand and an increase in personal investment and consumption. Inflation is estimated at 2.5% and current account is positive at 0.5% of GDP. The budget deficit will be reduced by efforts to cut expenses.
Sebastian Eckardt, a WB senior economist, said: “Vietnam is probably of the fast growing economies regionally and internationally. Vietnam expects a growth by the end of the year and our baseline assessment is at 6%. But the recovery maintains a momentum and possibly exceeds 6%. The unbalanced trade could impact trace account but because of the strong and resilient remittances, we expect curtain surplus by the end of the year. Fiscal deficit in line with government targets, we expect that public debt will continue the upward trend but remain below the current 75% of GDP.”
In the first four months of 2015, the index of industrial production posted a strong rise, at 9.4% compared with 5.5% in the same period of 2014. The inventory index of the manufacturing sector rose 11.3% compared with the 13.9% rise as of April 1, 2014. Total retail sales and consumer services, excluding seasonal factors, rose by 8%. Passenger and freight transport volume increased steadily.
Almost every field of Vietnam’s economy witnessed positive rebound. Vietnamese stock market stands among top five fastest-growing markets in the world, with VN index and HNX index up by 19.9% and 30.4% respectively. Transaction volume in the housing market doubled over the same period last year, easing up a substantial amount of property inventories. Vietnam enjoyed trade surplus, a steady growth in FDI, ODA. Vietnam also performed well in ensuring social security, creating a good example in fulfilling the millennium development goals of the United Nations. Vietnamese investment and business climate continues to be enhanced and become more attractive to foreign investors. In recent years, there have been notable trends of multinationals, including Samsung and Nokia moving their business from China and Thailand into Vietnam subsequently triggered a new influx of smaller businesses.
Vietnam ranks second as most attractive nation in ASEAN for the US businesses, according to a survey by the U.S. Chamber of Commerce in Singapore. Moody’s Investors Service upgraded the ratings of Vietnam’s senior unsecured bond from B1 to B2 with a stable trajectory. Fitch Ratings has also raised Vietnam’s long-term Foreign and Local Currency Issuer Default Ratings to “BB-” from “B+”, citing improvements in the economy and stronger finances. Financial agencies including WB, ADB, HSBC, S&P, Moody’s, Ernst & Young forecast Vietnam GDP would grow from 5.4-5.6% in 2014 to 6% and 6%-7% in 2015 and between 2016-2017 respectively, well beyond the average growth of other emerging economies.
Such achievements are attributable to the master plan to restructure the economy by Vietnamese Government. The restructuring process is primarily aimed at building a modern market economy which integrates successfully into the global economy, laying foundations for an overhaul of the sectors of investment, banking, and state-owned enterprises (SOEs). The restructuring process has so far received consensus of the policymakers, analysts and businesses.
In addition to economic reform, Vietnam accelerates its international integration via a number of cooperation mechanisms, including ASEAN Free Trade Agreement (FTA), Regional Comprehensive Economic Partnership (RCEP), Trans Pacific Partnership (TPP) and Customs Union of Russia, Belarus, Kazakhstan, to which Vietnam has undertaken reform to accord. Vietnam’s integration into the world economy, especially its cooperation with EU and the US in a broad framework has fagged up its potential in the eyes of foreign investors.
Vietnam has beefed up its efforts in infrastructure development, educational reform, revamping administrative procedures to create incentives for both domestic and foreign investors.
Nevertheless, Vietnam’s economy are still heavily dependent on foreign-owned enterprises which accounts for around 70% of national exports, crimped by the inefficiencies of SOEs who are supposed to be the driving force of the economy but are performing poorly in technology innovation and R&D. Bad debt has not been resolved while the stock in real estate and processing and manufacturing sector remains high. Public debt soars, while the economic restructuring, especially in the state sector is implemented at a snail’s pace.
Overall, the outlook for the Vietnamese economy is positive, but a more comprehensive effort is needed. According to the Asia Development Bank, Vietnam’s economy is expected to grow by 6.1% in 2015 and 6.2% in 2016, compared with ASEAN’s average growth rates of 4.9% and 5.3% in 2015 and 2016 respectively. Inflation is expected at 2.5% in 2015 and 4% in 2016. However, the current account surplus will narrow from 3.1% of GDP in 2015 to 1.5% of GDP in 2016. Meanwhile according to an ANZ report released on April 17, Vietnam’s GDP growth in 2015 and 2016 will reach 6.5%, or even higher given positive results in the first months of the year.
Though there remain interior difficulties and challenges from political and economic fluctuations worldwide, Vietnam’s economy, with positive signs, is expected to grow steadily. Given determined and resolute policies of the Government, the economic restructuring process will be accelerated, creating a momentum for the long-term and sustained development, ensuring a bright prospect for the economy of Vietnam./.
Chia sẻ bài viết ^^
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All comments [ 5 ]


Jack Walker 11/8/15 23:03

those are results of issueing and implementing the proper policies by the Vietnamese Goverment

Anthony Jones 11/8/15 23:08

that's right, while many economies is facing difficulties, Vietnam's economy is steadily growing up.

Elizabeth Green 11/8/15 23:14

many international organizations like WB, ADB have highly evaluated the development of the Vietnamese economy.

Thompson Catherine 11/8/15 23:19

with the positive signs in the economy, Vietnam is attracting more foreign investors that believe the bright future of their doing bussiness in Vietnam

Davis Caroline 11/8/15 23:26

Vietnamese Goverment offers many favourable conditions to foreign investors that makes them more trustful, peacefulness and feel comfortable when investing in Vietnam

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