Taking Stock, December 2011 : An Update on Vietnam's Recent Economic Development
Prospects for the global economy have become less certain in the second half of 2011, with significant increase in downside risks. Developing countries in East Asia are growing faster than developed countries, but they too are facing challenges due...
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Hanoi
2017
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| Online Access: | http://documents.worldbank.org/curated/en/493921468329403602/Taking-stock-an-update-on-Vietnams-recent-economic-developments http://hdl.handle.net/10986/27090 |
| Summary: | Prospects for the global economy have
become less certain in the second half of 2011, with
significant increase in downside risks. Developing countries
in East Asia are growing faster than developed countries,
but they too are facing challenges due to a combination of
reasons including: slower expansion in demand in developed
countries; the impact of global uncertainty on investor
sentiments; natural disasters; and the withdrawal of
stimulus policies. Vietnam's growth slowed in 2011
compared to 2010, though it is still expected to reach
around 5.8 percent. The external sector has remained
relatively stable. The current account deficit declined in
2011, as export performance outpaced imports and remittances
grew robustly. Both import and export values saw a dramatic
rise, mostly because of higher commodities prices. External
debt remains sustainable, as the current account deficit was
more than covered through medium-term capital inflows that
are largely non debt-creating (foreign direct investments)
or contracted on concessional terms (official development
aid). Foreign direct investment inflows continued at a
steady pace, although new commitments declined.
International reserves increased in the first half of the
year while the Vietnamese dong benefitted from a period of
relative calm. In the last quarter of the year, however,
exchange rate fluctuations increased due to volatility in
gold prices, deepening uncertainties and the seasonal
increase in demand for foreign currency as the year end
approaches. In the longer run, Vietnam's ambition to
maintain high growth into the next decade will require as
bold a set of reforms as the one adopted with Doi Moi. The
challenge is arguably more difficult than the previous one,
and few countries in the world have accomplished it. Vietnam
is endowed with a young and hard-working labor force. This
is a vital asset to meet the country's ambitious goals,
if the country manages to equip itself with relevant skills,
and match it with necessary capital. It also needs a
level-playing field to maximize its potential. As people
become more educated and production becomes more
sophisticated, demands for predictability, trust and a level
playing field will grow. Transparency is a critical element
in this. Concentration of economic power in a small number
of large firms undermines efforts at creating a level
playing field. Large firms and industries that circumvent
rules to their advantage are promoting corruption, and
undermining efficiency, which damages the country's
potential. The governance challenges are complex, but
Vietnam's medium term outlook will be much better if
they are addressed sooner rather than later. |
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