You are here:  Home  >  All News  >  Current Article

An Update on Vietnam’s Recent Economic Development July 2013: Key Findings

By   /   July 15, 2013  /   No Comments



  •  Relatively stable macroeconomic conditions – Moderate inflation: 6.7% in June 2013. – Stable exchange rate—Dong depreciated by 1.6% percent in the past 12 months (average exchange rate by commercial banks) – Significant increase in foreign reserves— from 2.2 months of import cover at the end of first quarter of 2012 to 2.8 months at the end of first quarter of 2013 – Reduced sovereign risks—Vietnam’s credit default swap (CDS) is about 250 basis points in June 2013 compared to about 350 in June 2012.
  • Strong external balances
    – Solid export growth thanks to strong performance of foreign-invested sector:  Total export value rose by 16% in the first half of 2013 compared to the same period last year.  Foreign invested sector accounts for 66% of Vietnam total exports and grew by 25% – Diversified export composition: more hi-tech items  Exports of cell phones and parts become the largest export item ($9.9 billion) in the first 6 months of 2013, surpassing Vietnam traditional exports such as crude oil, garment or footwear  Cell phones, electronics and computer together now account for nearly a fifth of Vietnam total exports – Surplus in trade balance in 2012 – the first ever since 1992. – Largest current account surplus in country’s history: changed from a current account deficit of 11% of GDP in 2009 to a surplus of 5.9% in 2012;  it is projected to remain in surplus in 2013, though will be a lower amount than previous year.
  • Mixed signs from foreign investors

– FDI (implemented)/GDP ratio declined from a record 11.8% in 2008 to about 7.7% in the first half of 2013         – Existing competitors are performing better (e.g., Indonesia and Thailand) and new competitors have come up (e.g., Myanmar).         BUT         – Foreign investors still rank Vietnam as an attractive destination for future investments: Vietnam remains one of the most popular destinations for expansion within the ASEAN region according to ASEAN Business Outlook Survey by AmCham and Singapore Business Federation.


  •  Longest spell of slow growth since the onset of economic reforms in the late-1980s Real GDP grew by 5.25 percent (new series) in 2012, the lowest level since 1998 – During 2010-13 period Vietnam will grow at a slower pace than Indonesia and Philippines—first time in two decades.  Declining investment rate, low PMI and slumping retail sales – Across the board decline in investment rates: Total investment has fallen from 29.6 percent of GDP in the first quarter of 2013 from 38.5 percent in 2010. – Purchasing Managers Index has remained below 50 marks for most of 2012 and 2013 (PMI below 50 signals contraction in the production) – Growth in retail sales and services (in nominal terms) has falling from 24% in 2011 to 16% in 2012 and to 11.9% in the first half 2013.
  • Imports Slowdown – Imports by domestic sector fell by 7% in 2012, indicating a low demand for capital investment and intermediate goods, as well as weaker private consumption.
  •  Fiscal situation seems to be deteriorating – State finances are under stress on account of slower growth, lower revenue buoyancy and increased stimulus spending – Total revenue has fallen from 30 percent of GDP in mid-2000s to an all-time low of 22.8 percent of GDP in 2012 Capital spending (including off-budget) is estimated to have fallen from around 12.6 percent of GDP in 2010 to 7.8 percent in 2012 – External debt remains sustainable because of high current account surplus, but domestic debt is rising fast.
  • Slow structural reform: the process just begun but not yet decisively implemented
  •  An update on banking sector restructuring – Financial sector remains fragile, but risk of a systemic crisis has receded. – Restoration of macroeconomic stability and tight credit policy of SBV have prevented the vulnerabilities from growing bigger. – Establishment of the Vietnam Asset Management Company (VAMC) has so far been the most visible step on the part of the Government to resolve the NPL problems. – Resolution of NPLs will require a proactive multi-pronged approach.
  •  SOE reforms – More than two years after the government set out to reform the SOE sector, progress has been limited. – Work is ongoing to build on the existing legislation to create a comprehensive framework for the management of SOEs. – Successful restructuring of SOEs will be difficult to achieve without strong inter-agency coordination and improved transparency.


  • Economy expected to grow at a moderate rate of around 5.3 percent during 2013 and 5.4 percent in 2014.
  • Inflation is expected to increase to around 8.2 percent at the end of the year.
  • There are many downside risks: – Slower growth may intensify demand for further loosening of monetary and fiscal policies, with the risk of stoking inflationary pressures and reversing the recent gains in macroeconomics stability; – Delayed implementation of structural reforms could undermine investors’ confidence and worsen growth prospects further.

    Print       Email

Leave a Reply

You might also like...

CEOs’ take: China a powerful player with bright future ahead

Read More →
Skip to toolbar