Forecasts on the macro-economic situation in Vietnam in 2012

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Jan 3rd, 2012

Tuan Nguyen, ANT Consulting

Vietnam Prime Minister Nguyen Tan Dung emphasized at the 2012 New Year message notes that, Vietnam continue its efforts to restructure the economy, further strengthen macroeconomic stability, control inflation and maintain reasonable growth and ensure social security.

It is forecasted by experts of JPMorgan Chase Bank that in 2012, Vietnam’s economy will likely achieve a higher degree of stability than in 2011. With a view to appreciate the policy efforts of Vietnam government, the bank reported that the tightening policy has finally started showing results, expressed by the deceleration of inflation since August 2011 and the narrowing of the trade deficit. Director of World Bank in Vietnam also shared her view that if Vietnam still concentrates on macro-economic stability, not to loosen monetary policy, as a consequence, Vietnam’s inflation would cool down, the balance of payments is supported and foreign exchange reserves Vietnam will increase as people moved savings into Vietnam Dong.

The asset quality of banks is still one of the concerning issues of Vietnam’s economy, although the possibility of a crisis in the banking system at this time is low. Vietnam has shown efforts in restructuring the economy and the merger amongst Ficombank, Saigon Commercial Bank and Vietnam Tin Nghia Bank is the most recent movement of the State Bank of Vietnam. State Bank Governor, Mr Nguyen Van Binh said, from now until the end of the quarter I/2012, they will complete the review process, sort and classify banks according to health status, to take appropriate remedial measures.

The economic growth in 2012 is expected to achieve between 5-6% which is still very promising according to the Vietnam based World Bank Director. Inflation is planned to curb under 10%. Taking consideration of the fact that investing in emerging markets is a trend of investors when the markets in developed countries are going down. The BRIC group seemed to become less attractive when China’s economy declined, India lacked of lack of flexibility in stimulus measures, Russia faced political instability or Brazil encountered inflation problem. In the meantime, although there are still limitations certain major emerging countries such as Vietnam, Venezuela is still a good choice for investors

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