Economic Stability in Volatile Phase

 

Global economic growth is facing a lot of obstacles as political unrest and territorial disputes tend to accelerate, coupled with low inflation in the eurozone. As Vietnam's economy depends on exports, it is thus affected by unfavourable factors. 

In late June, the General Statistics Office of Vietnam (GSO) reported on optimistic socioeconomic performances in the first six months of 2014. GDP of Vietnam expanded 5.18 percent, higher than that in the first half of 2013 and 2012. This was also the highest first-half GDP growth in three years. Specifically, the agriculture, forestry and fisheries enlarged 2.96 percent; industry and construction increased 5.33 percent; and service sector rose 6.01 percent.

 

The business world remained in difficulty. New business start-ups decreased while corporate bankruptcies rose. In the first months of the year, as many as 33,454 companies went bust, were dissolved or terminated their operations, representing a year on year increase of 16.3 percent. Meanwhile, 8,322 inactive companies resumed operations in the six-month period, down 10.7 percent from a year earlier.

 

Economic development investment considerably increased. Total social investment capital was estimated at VND502.5 trillion (US$25 billion) in the first six months of 2014, up 8.2 percent year on year and equal 30.1 percent of the country’s GDP.

 

Export and export were bright spots of the economy in the first half. Exports reached US$70.9 billion in the period from January to June, up 14.9 percent year on year, while imports valued US$69.6 billion, up 11 percent. The country ran a trade surplus of US$1.51 billion in the first 6 months of 2014.

 

Macroeconomic stability was maintained while there were no unexpected changes in monetary, foreign exchange and gold markets. Consumer price index (CPI) remained stable. CPI climbed 1.38 percent in the first six months and 4.98 percent from a year earlier. On average, the monthly CPI growth was 0.23 percent.

 

In a recent press conference, Deputy Minister of Industry and Trade Do Thang Hai said the market is expanded by negotiation. So far, Vietnam has signed eight free trade agreements (FTAs) and is actively pushing negotiations for the FTA with the Customs Union of Russia - Kazakhstan - Belarus, the Vietnam - EU FTA, and Vietnam - South Korea FTA, and Trans-Pacific Partnership (TPP) Agreement. Recently, Minister of Industry and Trade Vu Huy Hoang led Vietnamese negotiators to the EU to carry out the last steps for the conclusion of Vietnam - EU FTA. The Ministry of Industry and Trade hoped the Vietnam - EU FTA, the FTA with the Customs Union of Russia - Kazakhstan - Belarus, and Vietnam -South Korea FTA will be concluded in 2014.

 

Domestic and international trade promotion has been accelerated, not only in major export markets like the US, the EU and Japan but also in other markets like Russia, Eastern Europe, the Middle East and Africa.

 

On his visit to Vietnam in mid-July, World Bank (WB) Jim Yong Kim said, “Vietnam is an exemplary development success story that needs to be shared globally." During his meeting with Vietnamese Prime Minister Nguyen Tan Dung, President Jim informed of the WB’s support for building a strategic report titled "Vietnam Report 2030" to help Vietnam work out long-term development orientations. This report is expected to help Vietnam change perceptions and standpoints on development in the context of extensive and intensive international integration and comprehensively reform market economic institutions based on Vietnam’s typical conditions.