Snapshot of national economy in past eight months

According to the General Statistics Office (GSO), the consumer price index (CPI) in August stood at 0.23 percent, lower than the previous two months. It is an importance index when measuring the inflation rate. The CPI in the last eight months increased by 5.08 percent over the end of 2009. It is quite possible that in 2010 Vietnam will successfully reach its target of keeping the inflation rate below the two-digit figure.

The country’s industrial growth rate in the past eight months has grown by nearly 13.7 percent against the same period last year, a considerable recovery for the national economy. This positive outcome will significantly contribute to a growth in GDP.

Vietnam’s total investment capital also saw a remarkable growth, with an increasing number of newly-established businesses in the last eight months after numerous difficulties and challenges in 2009. An additional 59,000 businesses have registered to join the domestic market since the beginning of 2010, with a total investment of more than VND370,000 billion, up almost 30 percent over the previous year. The inflow of foreign direct investment (FDI) reached nearly US$10.8 billion in August, or 1.5 times higher than the same period last year.

However, the domestic economy will also undergo many fluctuations if stable agencies do not intervene in time. During the past few weeks, the price of rice in the Mekong Delta has increased suddenly due to unsubstantiated rumours. Price hikes have also seen in some products after increases in the petrol price and the exchange rate between the Vietnam Dong and the US dollar. The domestic economy will also be strongly affected by price fluctuations on the global market, especially as Vietnam is opening its door wide open to the world.

In addition, the business operations of several State-owned enterprises have not yet proven effective, even though they play a key role in the national economy. The industrial growth of these businesses was lower than their set targets, and they also failed to use the State budget effectively.

Despite great efforts by the State Bank of Vietnam to adjust interest rates, the current interest rates at commercial banks are too high. Credit growth in the past eight months is also low and businesses are finding it difficult to access bank loans to expand their operations due to the high interest rates. By August 1, the proportion of industrial goods in stock had grown by 37 percent, compared to the same period last year.

More especially, the country’s trade deficit is currently at an alarming level, with the import surplus in the last eight months reaching over US$8 billion, nearly double 2009’s figure. This is attributed to a huge volume of imported materials, as domestic industries rely on imported materials.

The national economy has seen some green shoots, but they remain a number of hurdles to overcome on the way to achieving the National Assembly’s goal of ensuring stable macroeconomic growth.