Vietnam economic outlook 1-2012

Vietnam economic outlook 1-2012 summary: In 2011, Vietnam’s economic growth decreased as many prudent policies have been implemented in an attempt to ease inflation pressure and stabilize macro economy. Consequently, MoM inflation decelerated by the end of the year. Besides, depreciating pressure on foreign exchange rates in 2011 was not as high as it was in 2010 thanks to the SBV’s regulations such as applying cap interest rates, restraining unofficial transactions in foreign currencies, forcing State-owned companies to sell USD to banks, selling reserved USD, etc. We think that whether economic conditions in 2012 become more stable or not, depends strongly on the Government’s efforts to reduce budget deficit and to restructure financial system in the coming time.

Economy
Real GDP grew at 6.1% in Q4, up from 6.07% in Q3, making 2011 GDP growth rate be 5.89% which was lower than the target of 6%;
2011 inflation was officially reported at 18.13% yoy. Inflation pressure remains high in the coming months;
Exports and imports reached $96.2 and $105.7 billion respectively. Total trade deficit stood at $9.52 billion, the lowest figure within the last 5 years;
Contracted and disbursed FDI reached $14.7 billion and $11 billion respectively. 2012 FDI may not flow strongly into Vietnam because of instability in both global and domestic economy;
The foreign exchange market was volatile at the end of the year;
Around VND62.2 trillion of Vietnam government bonds (VGBs) and nearly VND44.1 trillion of government guaranteed bonds were successfully issued in 2011;
Totally, VND37.5 trillion was net-withdrawn via OMO in 2011;
In 2011, M2 and credit growth were reported to be around 11.5%.