Saturday, February 4, 2023 5:45:32 AM - Markets open
VN-INDEX 1,077.15 -0.44/-0.04%
HNX-INDEX 215.28 -0.03/-0.01%
UPCOM-INDEX 75.54 +0.66/+0.88%
Macroeconomic and monetary policies key to improving economy
Vietnamnews - 11/29/2022 4:04:06 PM
 (0 ratings. You must sign in to rate.)
A volatile global market, the COVID-19 pandemic, approaching the limit to horizontal expansion and inefficient macroeconomic policies in the past were among the major factors holding back Việt Nam's economic development, according to the Vietnam Center for Economic and Strategic Studies (VESS).
 
In a report on the country's macroeconomics and long-term growth, Prof Phạm Thế Anh, VESS's chief economist, said the Vietnamese economy experienced robust development during the 1991-2021 period, maintaining an annual 6.57 per cent GDP growth. By the end of last year, the country's GDP reached US$363 billion, breaking into the world's top 40 economies. The government has also managed to keep inflation in check while increasing the national foreign exchange reserve tenfold in the 2010-21 period.
 
Việt Nam's GDP per capita reached $3,700 in 2011, a 400 per cent increase from the same figure in 2011. However, in terms of GDP in purchasing power, the Southeast Asian economy still trailed behind major world economies at just 17 per cent of the US, 24-26 per cent of Japan and South Korea, 40 per cent of Malaysia, and 61 per cent of Thailand and China.
 
Anh said the country's public debt has been rising in recent years, posing risks to long-term economic development. During 2010-21, Việt Nam's debt increased from VNĐ1.144 to VNĐ3.655 quadrillion, a 320 per cent increase in a period of ten years. To make matters worse, public debt increased by 11.3 per cent annually, outpacing economic growth.
 
In addition, Việt Nam's economy remained heavily reliant on FDI and export. The country's fast-growing export sector, with an annual growth rate of 18.4 per cent during the period, far outpaced its GDP. In the last few years, Việt Nam recorded $20 billion in FDI, more than double the previous 10-year period.
 
State budget collection remained high at an average of 11.5 per cent annually in 2011-15 and 8.8 per cent in 2016-20. Việt Nam's State budget collection on GDP increased from 23.6 per cent to 25.2 per cent, the highest among ASEAN 5.
 
Priorities
 
Curbing inflation remained the country's top priority in the next phase of economic development, according to Anh. It's crucial that Việt Nam's monetary policy stay prudent, keeping supply in check in the coming years.
 
Budget discipline and transparency were still among the major shortcomings, posing the risk of causing uncertainty in the economy.
 
"The US economy provides us with a good example. Most of the time businesses were able to predict the FED's next move in adjusting interest rates fairly accurately," he said.
 
Anh said it was only possible because most economic information regarding the financial market, inflation, exchange rate, and unemployment data were made available to the public, significantly reducing the risk of causing economic shocks.
 
In comparison, Việt Nam's monetary policy appeared unpredictable. Interest rates could remain unchanged for an extended period of time, yet could be adjusted by 1-2 percentage points within a few weeks.
 
"Sudden moves as such can introduce a lot of uncertainty and put businesses and consumers alike at risk," he said.
 
He urged the government to focus on macroeconomics, improve system stability and consider employing a floating exchange rate model instead of the current fixed exchange rate model.
 
"It rarely works," Anh said.
 
While interest rates have reached the double-digit figure in Việt Nam in recent months, ASEAN-5, who employ a floating exchange rate model, has successfully kept it low at a 3-5 per cent increase. Economists have long voiced concerns over the government's excessive intervention in the economy.
 
For example, commercial banks' credit ceilings have been largely counter-productive in controlling inflation. Anh said banks should be free to follow market principles, as long as they comply with safety and market standards. Instead, the government should focus on tightening the money supply via the State Bank of Vietnam and supervision of poor-performing banks. VNS
 
Read original article here
Newer News
31/01 January’s CPI increases 0.52 per cent due to high Tết demand
31/01 Việt Nam attracts $1.69 billion in foreign investment in January
30/01 Hanoi’s January CPI moderately increases
30/01 Vietnam posts trade surplus of 3.6 billion USD in January
30/01 Ministry assesses profit and loss of FDI enterprises
26/01 Hải Phòng aims to become an international logistics centre
25/01 Seaports nationwide busy through Tet break
23/01 Vietnam’s imprint in 2022: All-out efforts bring spectacular growth
21/01 Tuna becomes billion-dollar export for first time: VASEP
18/01 Weakening demand continues to dog Vietnamese firms
Older News
29/11 Việt Nam lures over $25 billion in foreign investment in 11 months
23/11 China expected to remain largest export market for Vietnamese pangasius in 2022
23/11 MoF continues to consider adjusting costs of petrol: expert
18/11 Lack of orders plague export businesses
11/11 Petrol prices surge in latest adjustment
07/11 MoIT orders inspections of gas stations suspending operations
07/11 Pessimistic outlook for maritime transport firms amid weak demand
24/10 Economic recovery plan to boost national growth
24/10 Vietnam to experience import, export difficulties by end of year: MoIT
24/10 Fishery sector takes various measures to get EC yellow card removed
 
Newsletter Signup
Top Stories
State-owned banks under capital increase pressure
Shares make large gains on banking, securities stocks
Trading in tight range ahead of Tết holidays
Enterprises in HCM City receive credit disbursement, but rates remain high
Market opens the new year on a positive note
Market Update
Last updated at 3:05:01 PM
VN-INDEX 1,077.15 -0.44/-0.04%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.