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8/8/2019 Vietnam - Economic Update (19 June 2008)
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The Socialist Republic of Vietnam
Economic UpdateJune 2008
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Table of Contents
1. Historical Macroeconomic Performance
2. Current Macroeconomic Situation
3. Policy Response to Address Macroeconomic Issues
4. Economic Outlook
Appendix
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1. Historical Macroeconomic Performance
[DRAFT]
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31.5%
22.4% 22.7% 21.5%
30.5%
20.6%
2003A 2004A 2005A 2006A 2007A 2008 YTD
Historical Macroeconomic Performance 2003 to 2007
Vietnam has experienced strong economic growth over the last five years
Source: Ministry of Planning and Investment
(Y-o-Y)
GDP Growth Export Growth
Committed FDI (US$ BN)
7.7%
8.4%8.2%
8.5%
7.2%
2003A 2004A 2005A 2006A 2007A
Source: Ministry of Finance Source: Ministry of Trade
4.5
6.8
12.0
20.3
3.1
2003A 2004A 2005A 2006A 2007A
! Average GDP growth of 7.5% per annum
! Strong export growth, >23% per annum
! Robust FDI commitment
! Effective poverty reduction policies
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Key Economic Indicators
1.7(2.4)(1.7)Budget deficit (% GDP)
7.120.3FDI committed (US$ billions)
21,51070,70558,921Import Volume (US$ million)
13,16065,82454,400Export Volume (US$ million)(1)
880 900832Per capita GDP at current prices (US$)
7.4%7.0%8.5%Real GDP growth (%)
16,40075,86570,902GDP at current prices (US$ millions)
1Q 2008Target 20082007
(1) Includes services
Source: Ministry of Finance
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2. Current Macroeconomic Situation
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Inflation is driven by strong credit growth, increased aggregate demand and higher pricesof food, imported commodities and oil
-3,000
-2,000
-1,000
0
Jan-
07 Feb Mar April May June Jul Aug Sept Oct Nov Dec
Jan-
08 Feb Mar Apr May
0%
10%
20%
Ja
n-07
Feb
Mar
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Ja
n-08
Feb
Mar
Apr
May
Current Macroeconomic Situation 2007 to 2008 YTD
Source: Ministry of Trade, General Statistics Office
Inflation
Trade Deficit (US$ MM)
Source: General Statistics Office
(Y-o-Y)
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Imports Support Economic Development
Vietnams major import groups assist to promote economic development
! Rising proportion of capital goods imported will help boost future domestic productivity, but havebeen subject to rising prices
! Rise in imports in 2007 was due to large industrial machinery and equipment imports to support
national oil refining and exploration, hydro power, factory outfitting and infrastructureconstruction
! As a net importer of refined oil, inflation has been impacted. However, situation will bemitigated when Vietnams new oil refinery commences operations, expected in 2009
Source: Ministry of Trade Source: Ministry of Trade
Imports by Region Imports by Sector
(% by value of imports) (% by value of imports)
3.6%2.8%Motor Vehicles
1.6%1.6%Fertilizer
51.9%52.4%Others
5.3%6.4%Leather & Materials
8.2%7.2%Steel, Iron & Clinker
12.3%14.0%Petroleum
17.1%15.6%Machinery
2007A2006ASector
16.9%19.0%Rest of Asia
18.3%15.0%Others
8.6%9.1%South Korea
2.8%2.3%US
10.1%11.1%Japan
11.4%11.3%Taiwan
12.0%14.8%Singapore
20.0%17.4%China
2007A2006ASector
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3,305 2,753 3,087 3,088
17,540
6,821
8.3% 6.0% 5.8% 5.1%
24.7%
2003A 2004A 2005A 2006A 2007A 1Q 08E
Capital Account As % of GDP
2,150883
2,131
4,322
10,198
2,993
5.4%1.9%
4.0%7.1%
14.4%
2003A 2004A 2005A 2006A 2007A 1Q 08E
BOP As % of GDP
Balance of Payments Remains Robust
Source: State Bank of Vietnam
Flow of funds from outside of Vietnam has assisted to stabilise the BoP position
Source: State Bank of Vietnam
Current Account (US$ MN)
Balance of Payments (US$ MN)
Capital Account (US$ MN)
Source: State Bank of Vietnam
(1,931)(925) (497)
(6,992)
(5,287)
(164)
(4.9%) (2.0%) (0.9%) (0.3%) (9.9%)
2003A 2004A 2005A 2006A 2007A 1Q 08E
Current Account As % of GDP
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12.0
20.3
14.7
3.3
4.1
8.0
6.82005A
2006A
2007A
5M 2008
Realised
Committed
6.5%5.7%
4.9%6.0%
2005A 2006A 2007A Long Term
Forecast
(13,300)
(17,213)(19,210)
4,500
(1.6%) (1.8%) (1.7%)
2005A 2006A 2007A 1Q 2008E
Fiscal Balance As % of GDP
Other Economic Indicators Remain Strong
Source: Ministry of Finance Source: Ministry of Trade, General Statistics Office
FDI (US$ BN)
Fiscal Balance (VND BN, % GDP) Debt Service Ratio
Source: Ministry of Planning and Investment
FDI strength expected to continue throughout 2008 and foreign debt repayments are low