The executive board of the International Monetary Fund (IMF) has just completed a policy consultation with the Vietnamese government, concluding that the country’s macroeconomic monitoring policies are proving to be effective, enabling the economy to cope with external headwinds and reach high growth.
Alisara Mahasandana, IMF executive director for Vietnam, said, “In the context of rising trade tensions, heightened uncertainties, and downside risks in the global economy, the Vietnamese economy in 2018 and early 2019 has remained resilient, supported by strong macroeconomic fundamentals. Appropriate policy framework together with sound and timely policy responses will help ensure sustained economic growth in 2019.”
The economy has remained resilient to date and growth reached a 10-year high of 7.1% in 2018, and 6.76% in the first half of 2019. The IMF expects that Vietnam will grow by 6.5% this year, a high rate for a Southeast Asian nation.
“The broad-based expansion is fuelled by healthy growth in incomes and domestic consumption as well as by strong trade, tourism, and remittances. Manufacturing is surging, the trade surplus has widened, and foreign direct investment (FDI) inflows remain strong,” Mahasandana added.
Vietnam earned a trade surplus of US$7.2 billion last year, and US$925 million from January to July 15 this year.
In the first half of 2019, the country attracted US$18.47 billion worth of newly-registered and newly-increased FDI and stake acquisitions. Disbursed FDI hit US$9.1 billion, up 8% year-on-year.
Michael DC Choi, deputy general director of the Korea Trade-Investment Promotion Agency, said that Vietnam has become an attractive investment destination for foreign investors.
Vietnam is now home to about US$64.8 billion worth of Korean investment, and “in the coming time, Korean financiers will continue boosting their investment in manufacturing, machinery, foodstuffs, consumer goods, and banking and finance in Vietnam.”
“Vietnam’s macroeconomic monitoring policies are on the right track, making the country an increasingly appealing investment for international investors,” Choi said.
At a recent meeting with the leaders of the Vietnamese government, World Bank country director Ousmane Dione said he is impressed at what the government has done to drive the economy.
“I am inspired by the government’s strong commitment to act as a facilitator for Vietnam’s inclusive economic development and growth in the new development era,” Dione said. “Under the leadership of the government, Vietnam’s socio-economic achievements have been remarkable. Over the course of 30 years, the economy has expanded at an average of nearly 7% annually. As a result, per capita income has increased almost five-fold.”
Vietnam today has emerged as a thriving lower middle-income economy and an export powerhouse. Growth has also been inclusive, with poverty falling just below 7%, compared to more than 60% in the late 1980s, according to the World Bank, who forecast that Vietnam will grow by 6.6% this year.
The Asian Development Bank (ADB) is also upbeat about Vietnam’s economic prospects this year. The bank’s country director for Vietnam, Eric Sidgwick, told the government that the country “has made a well-recognised stand-out performance in terms of growth, progress, and social economy.”
According to the ADB, with growth in the global economy and world trade forecast
to slow, growth in Vietnam is projected to be moderate but “remain strong at 6.8% in 2019 and 6.7% in 2020.”
Projections see Vietnam retaining the highest growth rate in the region, ahead of China (6.3% in 2019 and 6.1% in 2020), Indonesia (5.2% in 2019 and 5.3% in 2020), and the Philippines (6.4% in 2019 and 6.4% next year).
“Growth will continue to be broad-based, underpinned by export-oriented manufacturing, inward FDI, and sustained domestic demand,” said the latest ADB report on Vietnam’s economic update released last month.
According to global data monitor FocusEconomics Consensus, sound macroeconomic monitoring policies have and will create a brighter outlook for Vietnam.
“The outlook for 2019 remains favourable. Household spending will remain brisk amid stable inflation and rising incomes, while sustained tourism should support the service sector. Moreover, industrial output, FDI, and exports should continue to power growth,” said FocusEcononics in a document on Vietnam’s economic outlook sent to Nhan dan Online.
Furthermore, they project that the economy will expand 6.6% in 2019 and 6.4% in 2020, the highest in the whole Southeast Asian region (4.8% in both 2019 and 2020), and favourable compared to Brunei (2.6% and 2.9%), Indonesia (5.1% and 5.2%), Malaysia (4.5% and 4.5%), the Philippines (6.3% and 6.3%), Singapore (2.5% and 2.5%), and Thailand (3.6% and 3.6%).
