Vietnam Market Watch: Growth Projections, Food Price Inflation, and IMF assistance with Development Goals
Cost of Food Increasing Exponentially
The General Statistic Office (GSO) has revealed that the average Vietnamese citizen spends nearly three times more on food than they did in 2004. In the coming year, annual spending on food and foodstuff is expected to rise from a 2015 high of US $ 250 to US $ 256 in 2016.
In 2015, the average expense on food per person per month was around US $21. In a few metropolitans, this figure has nearly doubled. Đinh Thị Mỹ Loan, Chairwoman of Vietnam Retailers Association (VRA) attributed the new food consumption and expenditure pattern to the growth of the retail sector in the country. While, only 15 percent of consumers buy food and food products from supermarkets, the growth of the sector will boost the food consumption and associated expenditure in the coming months.
Independent Report forecasts strong growth economic growth for Vietnam
The Institute of Chartered Accountants in England and Wales (ICAEW) says that Vietnam’s Gross Domestic Product (GDP) will remain between 6-7 percent from 2016 to 2018. The report indicates that Vietnam is the “bright spark” in the ASEAN economy. Vietnam’s growth accelerated to 6.7 percent in 2015, facilitated by new highs in foreign direct investment (FDI) and strong export growth.
The report states that the growth prospects for Vietnam in 2016 are the brightest among ASEAN member states. It also projects that Vietnam will grow at 6.3 percent, which, despite a dip from 2015, is still the highest in ASEAN. The Philippines and Indonesia follow Vietnam with growth rates projected at 6.1 and 5.1 percent respectively.
Economists believe that Vietnam’s growth is based on a competitive domestic economy, low debt, macro-stability, and wage competitiveness. In addition, a number of ASEAN countries have been affected adversely by China’s economic downturn as such countries have large parts of their manufacturing dependent on China. In comparison, Vietnam is relatively insulated from China economically, thus ensuring a healthier growth rate among ASEAN member states.
IMF to Aid Vietnam in Achieving Development Goals
Christine Lagarde, managing director of the International Monetary Fund (IMF) on 16 March said that the organization was keen to aid Vietnam in achieving its development goals. The IMF wants to develop extensive cooperation with Vietnam, which will include monetary assistance as well as technical training and operational support.
Lagarde said that Vietnam needs to reform, improved labor productivity and domestic competitiveness to ensure sustainable growth. He went on the say that effective reforms will ensure an effective annual growth rate of seven percent next five years. He specially identified improved governance and promotion of democracy as two key areas where reforms were needed. The statement from Lagarde reflects the Vietnam’s economic potential. Analysts believe that Vietnam will develop at a very fast pace if the government is able to implement the necessary reforms smoothly.
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