Briefing Notes for the Launch in Hanoi, March 2009
- Economic growth slowed down in Viet Nam from 8.5% in 2007 to 6.2% in 2008, the
lowest since 2000.
- After increasing from an average of 23.8% over 2003-2007 to 45% (year-on-year) during
the second and third quarter of 2008, the rate of growth of exports dropped to 6.5% in
the fourth quarter and to -3.7% over January-February 2009.
- The rate of growth of private consumption is estimated to have dropped in 2008 to 5.2%
(year-on-year) from 9.6% the year before.
- The rate of growth of gross fixed is estimated to have remained at double digit levels in
2008 (14% year-on-year), though lower than the very fast growth reported in 2007
- Government consumption is estimated to have slowed slightly, from 8.9% in 2007 to 8%
- As of the end of February, GDP growth was forecast to drop to 4% in 2009, the lowest
since data became available in 1990.
Inflation, monetary policy and exchange rate developments
- Reflecting dramatic price increases in international commodity markets in the first half of
2008, Viet Namís inflation rate increased from an average of 8.9% in 2007 to 24.8% in
the second quarter of 2008 (year-on-year) and a peak of 29% in October.
- However, inflation decelerated towards the end of 2008, as the price of crude oil and
other commodities plunged, reaching 14.8% in February 2009.
- In an attempt to control inflation, the central bank increased its policy rate sharply, from
8.75% to 12% in May 2008, and to 14% in June.
- But as inflation decelerated and the global financial crisis caused ripple effects in Asia,
the central bank cut the rate four times by 100 basis points each time between October
and December 2008, and two times by 150 basis points each time between December
and February 2009 to 7%.
- The combination of drops in exports and cuts in interest rates contributed to a
depreciation of the exchange rate from an average of 15,950 dong per dollar in the first
quarter of 2008 to 16,900 in the fourth quarter, and 17,470 in February 2009.
- Viet Nam held $24.1 billion in foreign exchange reserves at the end of the third quarter
of 2008, up from $22.8 billion a year before.
Fiscal situation and perspectives
- The budget deficit decreased from 4.9% of the GDP in 2007 to 4.1% in 2008.
- In December 2008 the Government announced a stimulus package of D17 trillion ($1
billion, 1.2% of the GDP) which includes, among other measures, a 4% subsidy on the
interest rates enterprises pay for their loans, credit for small businesses.
- More recently, in March 2009, the Government announced that it was planning
additional measures to bolster economic growth worth as much as D300 trillion, but
details were still to be announced.