REVIEW
of
FINANCE -
Feb. 2018
7
projected by the Parliament. The macroeconomy
remains stable and institutional improvements
for a better investment environment are being
under strict control by the Government, which is
expected to bring effectiveness, stronger support
for business activities in 2018. Especially, being the
host of the successful APEC 2017 as well as getting
CPTPP approved, Vietnam economy would be
given more trusts from foreign investors, leading
to more opportunities in the next few years.
However, there have been a series of internal issues
to be resolved completely as follows:
Firstly,
the motivation for economic growth
has not come from productivity increase. Besides,
the advantage of cheap labor force is becoming
weaker and weaker due to the impacts of Industrial
Revolution 4.0. Moreover, our natural resources are
becoming scarcer and scarcer, which leads to the
continuous decline in extractive industry. There have
not been any advances in manufacturing industry
while agriculture is facing with many big risks of
natural disasters and impacts of climate changes.
Given these conditions, Vietnam is forced to consider
the economic growth as a challenge in 2018.
Secondly,
state budget deficits and government
debts are still receiving public’s concerns. In the
fact that it is becoming more and more difficult to
obtain ODA, Vietnam will be supposed to utilize
its internal resources to push the economic growth.
Thirdly,
Vietnam economy is supposed to face
with many hidden threats as long as it depends a
lot on the worlds’ economy and its foreign invested
sectors. Especially in 2018 there would be many
big risks in geo-politics, trendy protectionism and
speedy changes in the world’s technology and
science.
References:
1. CEIC (2017), CEIC database, 25/12/2017 at CEIC Database:
ceicdata.com;
2. State Bank (2017), 25/12/2017 at
vi/pages/trangchu/tk/;
3. General Statistics Office of Vietnam (2017), Socio – economic overview
of 2017;
4. General Statistics Office of Vietnam (2016), Socio – economic overview
of 2016;
5. General Statistics Office of Vietnam (2015), Socio – economic overview
of 2015;
6. VEPR (2017), Reports on Macroeconomy of Vietnam quarter III/2017.
for Vietnam State Bank to interfere the markets. In
addition, the stable increase in foreign currencies
fromoverseasVietnameses also supportedexchange
rate stabilization. Consequently, the State Bank
had more policy space to be able to continuously
maintain its loose monetary policies, reducing
interest rate in order to stimulate the economy.
- In exchange markets:
Nominal exchange rates
remained stable throughout 2017. Thanks to low
inflation, flush foreign currency supply fueled
by the increase in both foreign direct investment
and foreign indirect investment, as well as the
continuous devaluation of USD compared to other
strong currencies, the pressure on VND/USD
exchange rate in Vietnam has been becoming less
and less. As a consequence, reference exchange
rates and real effective exchange rates offered by
commercial banks fluctuated quite slightly in the
second half of 2017. As of December 31st 2017,
VND/USD exchange rate determined by State
Bank is 22,425 VND/USD, 1.2% higher than that in
the last months of 2016.
- In goldmarkets:
Although therewere continuous
fluctuations inworld’s goldmarkets, domestic gold
prices still remained stable throughout the year of
2017. The gap between domestic and international
prices seemed to become smaller in quarter
III/2017, especially in the first half of September
when the gap became alsmost zero and the price
then was 36.6 million VND/37.5 gr. After that, the
world’s gold prices fell down due to the pressure
from stronger USD, leading to a rise in domestic
gold prices. As a result, the gap turned out very
obviously big. This indicated the weak connection
between domestic and international gold markets.
- Real estate markets showed the differences in Hanoi
and Hochiminh City.
Real estate markets in Hanoi
seemed to be quiet whereas those in Hochiminh
City experienced quite exciting operations with
increases in volumes for sale as well as successful
transactions. In both Hanoi and Hochiminh
markets, transactions were mainly in medium and
economy segments.
Outlook 2018: Challenges from internal issues
It can be said that 2017 is a successful year of
Vietnameconomy. This is illustrated by the fact that
after many years, Vietnam successfully achieved
13/13 economic indicators at a higher pace than
