Taking Stock, December 2014: An Update on Vietnam's Recent Economic Developments

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The global economy is showing signs of recovery, but at an uneven pace; global growth is expected to rise modestly to 2.6 percent in 2014, and an average 3.3 percent in 2015-17. The gradual strengthening of activity in the Euro Area and especially the US will boost demand for exports from developing East Asia and Pacific (EAP), helping the region sustain its growth performance. There are early signs of firming up of economic recovery in Vietnam. GDP growth picked up to a relatively brisk 6.2 percent (y-o-y) in the third quarter of 2014, contributing to an overall growth rate of 5.6 percent for the first nine months of the year. Credit growth continues to come in below target, hampering the State Bank of Vietnam's efforts to carry out credit expansion to support economic growth. The Government has taken some important measures in 2014 to improve business conditions, which are expected to bear fruit from 2015 onward. The Government issued Resolution 19 (March 18, 2014), which prioritizes shortening the time for processing and completion of administrative procedures, reducing administrative costs, and strengthening transparency and accountability of state administrative agencies. The Financial Sector Assessment Program (FSAP) provides a comprehensive framework to identify financial system vulnerabilities and develop appropriate policy responses. Recognizing its importance, in July 2012 the Government of Vietnam invited the World Bank and the IMF to initiate an FSAP for Vietnam. In recent years the Vietnamese economy had shown signs of corporate and financial distress, and slowdown in GDP growth. In response to this, the government announced a comprehensive reform program designed to address the problems faced by the financial and corporate sectors. The FSAP provides a broad set of policy recommendations that can be used to operationalize the SEDP and the banking restructuring program. The recommendations include recapitalization plans, the workout of NPLs, regulatory and other reforms, and the temporary extension of the safety net.
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World Bank. 2014. Taking Stock, December 2014: An Update on Vietnam's Recent Economic Developments. © Washington, DC. License: CC BY 3.0 IGO.
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