ECONOMIC
OVERVIEW
VIETNAM’S
ECONOMY
ECONOMIC
DEVELOPMENT
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 ECONOMIC
OVERVIEW
• 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 hitech 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
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.
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
1. Shorten the time for administrative procedures for filing taxes.
2. Reduce administrative costs.
3. Strengthen the transparency
administrative agencies.
and
accountability
of
state
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.
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