Prime minister claims recovery

“Vietnam has achieved economic stability with inflation under control,” he said.

He announced that the consumer price index (CPI) plummeted from 18.13 per cent in 2011 to about only 6 per cent in 2013, recording the lowest CPI level over the past ten years.

The 11-month CPI rose 5.5 per cent, far lower than the 11-month CPI rates of 9.58 per cent in 2010, 17.5 in 2011and 6.52 in 2012, respectively.

“This is one of the most outstanding achievements in the government’s macroeconomic monitoring,” Dung said.

The index for industrial production (IIP) has been on the rise since early this year, with growth of 5.3, 6.9, and 8 per cent in the first three quarters, respectively. IIP climbed 8.2 per cent in October and 8.4 per cent in November.

These figures are reflective of a big bouncing in the economy,” said newly-appointed government spokesman Nguyen Van Nen at last week’s government press conference.

Sandeep Mahajan, lead economist from the World Bank in Vietnam, said that although Vietnam’s GDP was expected by both the WB and government to grow by 5.3 per cent this year, this was not a poor reflection on the economy as countries around the world were suffering from lower growth rates. He added that the 5.3 per cent rate was reflective of the economy’s full potential.

“Vietnam’s economy is clearly recovering and the government’s macro monitoring is on the right track and existing macro policies should be retained,” Mahajan said at last week’s announcement of World Bank update on Vietnam’s economy.

HSBC Vietnam CEO Sumit Dutta agreed there were clear signs of recovery.

Exports have grown from $72 billion in 2010 to $114 billion last year and more than $121 billion in the first 11 months of this year. Foreign exchange reserves have grown 200 per cent over the last two years and the dong has remained relatively stable against the dollar.

In its purchasing managers’ index released last week, HSBC said manufacturing output increased for the second month in a row with a solid growth rate, the highest since September 2011.

“Companies reported that production increased due to new orders from September and October,” the report read.

Ernst & Young Vietnam’s Rapid-growth Markets Forecast report released in late November also said Vietnam’s economy was recovering and it forecast that “Rising exports and foreign direct investment, and the fast-expanding domestic market, will underpin growth in excess of 6.4 per cent in 2015 and 7 per cent in 2016–17.”

However, according to Mahajan, Vietnam’s growth remained at modest levels, with one short-term constraint being subdued private sector confidence.

He said Vietnam had witnessed a sharp drop in the private investment rate from 15 per cent of gross domestic product during 2007-2010 to only 11.5 per cent this year. There had also been subdued consumer growth of 5.1 per cent during 2009-2012, compared to 8.9 per cent during the previous four years.