Vietnam Sets the Stage for an Improved 2012

Vietnam’s successful effort to get inflation below 20% for 2011 caused the country’s economic growth rate to sink well below last year’s 6.8% — although any developed country would be overjoyed to achieve Vietnam’s 2011 GDP growth that came in at 5.9%.

The consumer price index remained extremely high at 18% in December, but significantly below the summer peak.  The government hopes to get the CPI down to 9% next year while maintaining 6% economic growth and cutting interest rates on loans that had risen as high as 25% in 2011.

Four positives for the Vietnam economy:

  1. Exports are up 33% to $96 billion while imports increased 25% to $106 billion, resulting in a lower trade deficit.
  2. Foreign currency reserves have improved.
  3. The budget deficit is 5% of GDP, somewhat below expectations.
  4. Foreign debt declined from $37 billion to $33 billion — now 42% of GDP.

All of this suggests the business climate in Vietnam will improve significantly in 2012.

More on Vietnam’s economy at the end of 2011

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