Day: December 27, 2021

Vietnam has fulfilled a number of economic targets this year despite impacts of the COVID-19 pandemic, becoming one of the top 20 economies in the world in terms of international trade.

The country’s GDP grew 2 percent, while its foreign trade value surpassed 660 billion USD, up 21 percent, with a trade surplus of about 2.1 billion USD. Notably, foreign direct investment (FDI) poured into the country hit over 29 billion USD, up nearly 500 million USD from last year.

These achievements are attributable to efforts by the entire political system, the business community and people, along with the Government’s flexible decisions and policies.

Vietnam has shifted its strategy from “zero COVID-19” to safely and flexibly adapting to and effectively controlling the pandemic, helping to maintain economic activities.

Such policies and strategies have consolidated public confidence in the Government, and encouraged them to join hands in pandemic containment and economic development.

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Vietnam has fulfilled a number of economic targets this year. (Photo: VNA)

The fourth wave of pandemic outbreaks, which began late April, has prompted prolonged social distancing in a number of cities and provinces which are industrial hubs and top contributors to the State budget like Ho Chi Minh City, Hanoi, Da Nang, Can Tho, Bac Ninh, Bac Giang, Binh Duong and Dong Nai, resulting in sluggish production, disrupted supply chains and a decrease in the purchasing power.

Up to 1.8 million labourers lost their jobs or part of their incomes in the third quarter of this year, up 700,000 from the previous quarter, and the country’s economy contracted 6.17 percent – the sharpest drop since Vietnam began calculating and announcing its quarterly GDP. As a result, in the first nine months of this year, the national GDP was up only 1.42 percent.

However, the country’s socio-economic development has bounced back since October, as informed by Prime Minister Pham Minh Chinh at the Country Strategy Dialogue on Vietnam 2021 held at the end of the month.

During the January-October period, newly-registered FDI into Vietnam rose 11.6 percent and export went up 16.6 percent year-on-year. The country’s consumer price index (CPI) in the 10 months inched up only 1.81 percent.

PM Chinh said difficulties facing Vietnam are temporary, stressing the country’s potential, advantages and new driving forces for long-term development and macro foundation, with stable, solid major economic balances.

For a firm macro foundation, the country has issued unprecedented incentives for people and businesses affected by COVID-19, and made timely adjustments to policies.

Each locality has also adopted their own ways in implementing policies and guidelines of the Government to achieve the dual goals of pandemic combat and economic development.

The northern province of Quang Ninh is an example, which has fought the pandemic early and from afar in line with resolutions of the National Assembly, and instructions of the Government.

As a result, Quang Ninh is among very few localities that have posted the highest growth rate nationwide, reaching double-digit growth.

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With the timely, flexible policies, Vietnam is expected to see a GDP growth of over 2 percent this year, and the agricultural sector would expand 2.8 percent, continuing to be a pillar of the national economy.

Given the emergence of the Omicron variant that would greatly threaten the economy of Vietnam and the world, experts suggested that Vietnam should kick off its economic recovery programme early, and deal with limitations of the previous support packages in order to reach the economic growth target of 6-6.5 percent in 2022 as set by the legislature.

The NA is scheduled to convene an extraordinary meeting late December to discuss major matters, including those regarding fiscal and monetary policies mentioned in the economic recovery and development submitted by the Government.

ADB Country Director in Vietnam Andrew Jeffries said the recovery of Vietnam’s major partners, plus increased vaccination in the country would help to boost trade and facilitate economic reopening of the country.

Deputy Minister of Planning and Investment Tran Quoc Phuong pointed out the five groups of solutions in the economic recovery and development programme for the 2022-2023 period, covering the COVID-19 combat and medical work, social welfare, business support, public investment promotion and management, ensuring macro balances, and controlling inflation and risks.

Many experts shared the view that if the programme is rolled out well, the economy would expand by 1 – 1.5 percentage points.

Source: Vietnam News Agency

The World Bank, Asian Development Bank, VNDIRECT Securities Corporation, experts and investors are optimistic about Vietnam’s economic growth prospect next year thanks to drivers such as exports, domestic consumption, foreign direction investment attraction, timely and effective policies by the Government, according to an article recently published by Russia’s Sputnik.

The article said with high vaccination rate in late 2021, the Vietnamese economy has rebounded strongly with positive signals.

Preliminary data by the General Statistic Office, the General Department of Vietnam Customs and the Ministry of Industry and Trade showed that as of December 15, Vietnam’s total export-import value was estimated at a record 633.22 billion USD, up 22.9 percent annually, making Vietnam a trade surplus country for six consecutive years and one of the 20 leading economies worldwide in terms of global trade. Its export is forecast to continue to be a major driver of economic growth next year.

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(Illustrative photo: VNA)

While Delta and Omicron variants are hitting countries globally, Vietnam still maintained a positive growth of over 2 percent, it said.

The article quoted ADB Country Director in Vietnam Andrew Jeffries as saying that as Asia will witness a remarkable export recovery next year, Vietnam needs to make the best use of this opportunity, apart from 15 signed free trade agreements, to boost exports.

About the economic growth target of 6-6.5 percent next year, WB’s chief economist in Vietnam Jacques Morisset believed that Vietnam could achieve this goal that if it could put the pandemic under control and improve supply-demand balance.

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According to him, Vietnam could increase State budget expenditure by resuming public investment programmes and increasing support for those hit by the pandemic on the back of its high cash reserve.

He also suggested loosening fiscal policy and reducing taxes to step up spending.

Source: Vietnam News Agency

The Vietnamese Government and the World Bank have signed an agreement for financing of 221.5 million USD to support Vietnam’s post-pandemic recovery through policy reforms aimed at improving financial inclusion and spurring greater environmental resilience.

“In the spirit of our long-term, trusted and productive partnership, we are proud to support Vietnam at the time when the economy is recovering from the biggest shock of the past decades and when so many uncertainties remain around the pandemic,” said World Bank Country Director for Vietnam Carolyn Turk. “I believe that the range of policy actions supported by this operation will not only create a strong foundation for the immediate recovery from the COVID-19 crisis but also benefit Vietnam in the longer run.”

According to the WB, the 221.5-million-USD credit is a budget support operation and comes in the form of concessional terms for a period of 30 years with a grace period of five years. It encourages policy reforms under two pillars.

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World Bank Country Director for Vietnam Carolyn Turk (Photo: VNA)

The first supports an inclusive economic recovery by easing the tax burden on businesses, improving access to financial assistance for vulnerable groups, reducing gender gaps in the workplace, and promoting financial inclusion. The second pillar contributes to greening trade policies, accelerating the adoption of e-government, and increasing the uptake of renewable energy.

In its December 27 press release, the bank assessed that the Vietnamese government has moved quickly in recent months on the implementation of these reforms. The approval of mobile money licenses and the roll out of electronic invoice systems in the country’s largest municipalities are examples of this.

The credit is provided through the World Bank’s International Development Association (IDA), the bank’s concessional lending window for low-income countries.

Source: Vietnam News Agency

The global supply chain crisis, the global agreement on minimum corporate tax rate and the record high price of bitcoin are among the top 10 world economic events this year as selected by the Vietnam News Agency (VNA).

1. World economy’s rapid recovery with potential risks

In 2021, the global economy has gradually escaped the recession and recovered quickly as economies reopened and deployed post-COVID-19 growth stimulus packages.

The International Monetary Fund (IMF) forecasts that the world economy will grow by about 6 percent this year – the fastest pace in the past four decades. However, the high and prolonged inflation, plus the emergence of the Omicron variant may hinder the economic recovery in the coming time.

2. Global supply chain crisis

The rapid spread of the COVID-19 pandemic at factories has caused labour shortages, disrupted production, and caused an imbalance between goods supply and demand.

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Container port in Hamburg, Germany (Photo: Reuters/VNA)

The shortage of ships and containers at major seaports around the world has also led to the congestion of sea transportation. Transport cost on shipping routes from Asia to Europe sometimes increased about 10 times, and from China to the US west coast, 2.85 times.

To avoid disruptions in the global supply chain, many businesses have tended to move their production locations closer to consumption markets and optimised modern supply chains through technological application in distribution.

3. Commitments to phasing out coal-fired power

At the 26th session of the Conference of the Parties of the UN Framework Convention on Climate Change (COP26) in the UK from October 31 to November 13, more than 40 countries, including Vietnam, and organisations have committed to generally phasing out their use of coal-fired power and stopping the support for the construction of new coal power plants.

To achieve the global climate goal, major economies will shift away from coal-fired power by the 2030s and others will follow the suit in the 2040s.

The parties also pledged to increase financial support to poor and developing countries to cope with climate change.

4. Global agreement on minimum corporate tax rate

Finance ministers and central bank governors of the world’s 20 biggest economies (G20) on October 13 approved a global deal to improve the corporate tax system, on the basis of an agreement reached earlier by the Group of Seven (G7) nations.

From 2023, a global minimum corporate tax rate of 15 percent will be applied to companies with revenue of 870 million USD or above. It is estimated that this will generate about 150 billion USD annually in additional global tax revenues.

The deal aims to ensure that multinational businesses are subject to a minimum effective level of tax on all of their profits each year.

5. Central banks beginning to rollback ultra-loose monetary policy

The world’s leading central banks have begun to gradually withdraw their unprecedented ultra-loose monetary policy and near-zero interest rate policy after about two years of application to support the economy amid the COVID-19 pandemic.

The Bank of England on December 16 became the world’s first major central bank to raise interest rates since the coronavirus pandemic hammered the global economy. The US Federal Reserve (Fed) also announced its roadmap for interest rate hikes in 2022.

The European Central Bank (ECB) and the Bank of Japan (BoJ) have maintained their interest rates but noticed that they would end bond purchases in March 2022.

Such different approaches suggest that the central banks are seeking ways to balance inflationary threats and new risks to economic growth due to Omicron.

6. Busy year of mergers and acquisition

Global merger and acquisition (MandA) activity shattered all-time records in 2021, comfortably erasing the high-water mark that was set nearly 15 years ago.

As of December 16, the value of MandA globally topped 5,63 trillion USD, according to Dealogic data, easily surpassing the pre-financial-crisis record of 4.42 trillion USD in 2007.

7. China’s economic crackdowns

In 2021, China has issued many new regulations to tighten management in such fields as technology, real estate and education, causing greater pressures on private companies.

Chinese property giant Evergrande is on the verge of bankruptcy after the Chinese government enacted new property lending restrictions to curb skyrocketing house prices and excessive borrowing.

China’s stricter bills on digital technology also make it difficult for big names in the technology sector such as Alibaba, ByteDance, Weibo and Tencent to operate.

8. Bitcoin’s record high price

Bitcoin, the world’s largest cryptocurrency, hit a new record high of 69,044 USD on November 10, and is projected to hit 100,000 USD soon.

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Bitcoin (Photo: AFP/VNA)

The International Monetary Fund (IMF) is concerned about the rapid development of digital currencies without appropriate management regulations.

Bitcoin’s sharp price increase has forced countries to tighten the control of the currency, and at the same time, some countries have stepped up the research and testing of the digitalisation of traditional currencies.

El Salvador has become the first country in the world to make bitcoin a legal currency.

9. Disrupted global trade due to stranding of Ever Given in Suez canal

The Ever Given mega-container ship ran aground in the Suez Canal on March 23, holding up an estimated 10 billion USD of goods each day.

The canal, in operation since 1869, carries over 10 percent of global trade, 10 percent of oil, and 8 percent of liquified natural gas (LNG) of the world.

The incident has revealed the weakness of the shipping industry and the global trade’s reliance on the Suez Canal. It has also shown the urgent need to diversify international shipping routes.

10. World facing energy crisis

In 2021, an energy supply crisis taken place across all continents. Wholesale European gas prices were up more than 800 percent, coal prices increased 110 percent and crude oil prices rose to above 80 USD/barrel – the highest since 2014.

The energy market has entered a new price cycle due to strong demand following economic reopening, plus the serious shortage of coal and gas.

The escalating energy prices have pushed up inflation, disrupted production and goods supply chains, and threatened the economic recovery.

However, in the long term, the energy crisis would prompt countries to invest in developing more sustainable energy sources.

Source: Vietnam News Agency