World Bank Report on Vietnam's Macroeconomic Situation
Wed 30 Jun 2010Vietnam has navigated the global crisis better than many other countries.
According to the World Bank Report
"Taking Stock - An Update on Vietnam’s Recent Economic Developments"
(click on title to download the full report)
- Its GDP grew by 5.3 percent in 2009, accelerating to 6.9 percent in the last quarter of the year. At 5.8 percent, the figure for the first quarter of 2010 was less impressive, but claims that growth has slowed down are most probably unwarranted.
- Exports declined in 2009, for the first time since the beginning of economic reforms, but their decline was smaller than in other countries of the region. By now export growth is converging back to the 30 percent annual growth rate observed before the crisis.
- Inflation, which had reached 19.9 percent in 2008 was down to 6.5 percent in 2009. While there were some worrying signs of inflation acceleration in late 2009 and early 2010, by now the monthly increase of the Consumer Price Index (CPI) is again moderate.
- And as in previous years, there were no banking crises despite the continuation of macroeconomic turbulence.
These positive outcomes owe much to the determination of the government to timely react to changing economic conditions.
Over less than three years, the Vietnamese economy went from steady growth to overheating to stabilization to stimulus to rebalancing.
As circumstances changed, it did not take long for government to adjust its policy stance. In some opportunities the change in course involved taking unorthodox measures, as when a compulsory bond was used to mop up excess liquidity and bring asset price bubbles to an end, or when an interest rate subsidy scheme allowed enterprises to quickly refinance debts they had contracted in excessively onerous terms.
More recently, a sizeable stimulus package, combining tax rebates and exemptions with increased government spending and rapid credit growth succeeded at supporting domestic demand and sustaining economic growth.
The success is all the more remarkable given that exports accounted for roughly 67 percent of GDP when the crisis hit.
For more information about this report, please visit the World Bank website.
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