Economic Revitalisation: GDP Resurgence

NFSC report indicated GDP growth rate of 6.28 percent in the first 6 months and 6.4 percent in the first 9 months of 2015. The impressive growth is due to the contribution of the production sector, especially processing and manufacturing.

 

Growth rate is also recorded in import-export activities with reduction of trade deficit in the first 7 months. Export value attained US$92.3 billion (up 16.4 percent) and trade deficit US$3.4 billion (3.6 percent of export value and down by 1.2 percent)

 

The upsurge in economy has boosted business activities, the best development since 2009. The non-fiscal sector recorded high growth rates of 49.29 percent, 86.31 percent and 79.69 percent, respectively, in average revenue, asset and ownership.

 

With high growth rate in GDP and low inflation rate, business activities of non-fiscal sector become more stable. SMEs of this sector gained momentum since late 2014 with revenue in the first 6 months this year increased by 60.93 percent, 15.89 percent higher than that in the same period last year.

 

According to NFSC, the success is due to the efforts of businesses and the support of the State. Business activities of SMEs have been markedly improved. Economic revitalisation has boosted consumption and private investments. The retail sales of goods and services increased 9.9 percent in the first 7 months (minus price hike 8.3 percent over 6.35 percent in 2014); it is the highest record in the past 5 years.

 

According to ANZ, confidence indexes of consumers in July 2015 are 138.6 points, 4.5 less than last month. However, it is 7.6 points higher than 2014 (133 points).

 

NFSC indicated that foreign exchanges market remained stable in the first 7 months due the efforts of the State Bank in maintaining the exchange rates.

 

Meanwhile trade balance improved in the first 7 months, remittances from overseas Vietnamese in 2015 estimated at US$13-14 billion together with the increase in FDI disbursement. However, the issue of government bonds will be slowed down attaining only 34 percent of the year plan, regardless of some improvement in bidding.

 

By July, government bonds issued by State Treasury attained VND86,106.9 billion, 34.4 percent of the plan, successful rate of 58.4 percent average time of 8.48 years. Recently, State Treasury has issued government bonds for the third quarter and announced government bonds of 20 years.

 

While the issue of government bonds is difficult, credits increase notably. By July 20, credits to economic sector recorded 7.32 percent higher than that of late 2014.

According to NFSC survey, more households re-invest in production. 31 percent of inquiries tend to invest in production and service, 10 percent more than that of the first quarter of 2014.

 

The survey also shows that 51 percent of the people have savings in credit organizations (31 percent less than third quarter of 2014), the lowest since 2012. It shows that more people have confidence in investment for production.

 

For budget revenue, by July 15, 52.3 percent has been achieved, somewhat lower than 2014 (57.3 percent) due to lower price of crude oil (reduced by 32.5 percent). Nevertheless, domestic revenue increased 15.1 percent and continues to improve in remaining 5 months, promising to reach the year plan.

 

Pressure on exchange rate will increase toward the end of the year due to the import of machines and equipment for seasonal production, especially the increase in size and number of business activities.