World Bank2017-08-142017-08-142011-06https://hdl.handle.net/10986/27799In the last few years, Vietnam's macroeconomic situation has followed a predictable pattern. When faced with external shocks the authorities have opted to protect the country's rapid growth rate, even if it meant tolerating higher levels of macroeconomic instability. This has meant modest growth slowdowns and frequent episodes of overheating. So when the economy started to overheat in late 2010 following the delayed withdrawal of the fiscal and monetary stimulus put in place in 2009, few expected a determined response from the government to stem the ensuing macroeconomic volatility. The current episode of macroeconomic instability has been as severe as the previous overheating episode of mid-2008. The author constructed a summary measure of macroeconomic instability, Vietnam Index of Macroeconomic Stability (VIMS), based on the movement of four variables, namely nominal exchange rate, international reserves, inflation rate and nominal interest rate. Our measure shows that the degree of macroeconomic instability during the current episode did come quite close to mid-2008, but has not surpassed it yet. But unlike 2008, when the level of instability increased sharply and fell immediately, instability has persisted over a longer period of time during the current episode, from November 2010 to February 2011, exposing Vietnam's economy to a prolonged period of nervousness and uncertainty.en-USCC BY 3.0 IGOACCOUNTINGADVANCED ECONOMIESAGRICULTURAL COMMODITIESANNUAL GROWTHASSET PRICEASSET QUALITYBALANCE OF PAYMENTBALANCE OF PAYMENTSBALANCE-OF-PAYMENTS CRISESBANK MARKETBANK PORTFOLIOSBANK RATEBANKING LAWSBANKING SECTORBANKING SYSTEMBENEFICIARIESBOND SPREADSBONDSBROAD MONEYCAPACITY BUILDINGCAPITAL ACCOUNTCAPITAL ACCOUNTSCAPITAL CONTROLSCAPITAL FLIGHTCAPITAL FLOWSCAPITAL FORMATIONCAPITAL INFLOWSCDSCENTRAL RATECOMMERCIAL BANKSCOMMODITY PRICESCONSUMER PRICE INFLATIONCORPORATE GOVERNANCECORPORATE SAVINGSCREDIBILITYCREDIT DEFAULTCREDIT DEFAULT SWAPSCREDIT GROWTHCREDIT INSTITUTIONSCREDITORSCURRENCY CRISESCURRENT ACCOUNTCURRENT ACCOUNT DEFICITCURRENT ACCOUNT DEFICITSDEBTDEBT CRISISDEPOSITDEPOSITORSDEPOSITSDEPRECIATIONDEVALUATIONDEVALUATIONSDEVELOPING COUNTRIESDEVELOPING COUNTRYDISBURSEMENTDISBURSEMENTSDISCLOSURE OF INFORMATIONDISCLOSURE REQUIREMENTSDISCOUNT RATEDOMESTIC CAPITALDOMESTIC CREDITDOMESTIC DEMANDDOMESTIC ECONOMYDOMESTIC PRICESDRAG ON GROWTHECONOMIC DEVELOPMENTSECONOMIC DISRUPTIONECONOMIC GROWTHEMERGING MARKETSEQUIPMENTEQUIPMENTSEQUITY MARKETEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPENDITURESEXPORT PERFORMANCEEXPORTEREXTERNAL BALANCEEXTERNAL SHOCKSFINANCIAL CRISESFINANCIAL SAVINGSFINANCIAL SYSTEMFISCAL DEFICITFISCAL DEFICITSFISCAL POLICIESFISCAL POLICYFIXED INCOMESFLEXIBLE EXCHANGE RATEFOOD PRICEFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN INVESTMENTFOREIGN INVESTMENTSFOREIGN INVESTORSGLOBAL DEMANDGLOBAL ECONOMYGOLDGROWTH RATEGROWTH RATESHIGH INFLATIONHIGH-INCOME COUNTRIESHOLDINGSIMPORTSINFLATIONINFLATION RATEINFLATION RATESINFLATIONARY EXPECTATIONSINFLATIONARY PRESSUREINFORMATION DISCLOSUREINFORMATION TECHNOLOGYINSURANCEINTEREST RATEINTEREST RATE VOLATILITYINTEREST RATESINTERNATIONAL CAPITALINTERNATIONAL CAPITAL FLOWSINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL FINANCIAL STATISTICSINTERNATIONAL PRICESINTERNATIONAL RESERVESINTERNATIONAL STANDARDSINTERNATIONAL TRADEINVESTMENT INCOMEINVESTMENT PROJECTSINVESTMENT SPENDINGISSUANCELENDING INTEREST RATELIQUIDITYLIQUIDITY PROBLEMSLOANLOAN CLASSIFICATIONLOAN PORTFOLIOLOAN PORTFOLIOSLOCAL CURRENCYLONG-TERM LOANSMACROECONOMIC CONDITIONSMACROECONOMIC CRISISMACROECONOMIC ENVIRONMENTMACROECONOMIC INSTABILITYMACROECONOMIC POLICIESMACROECONOMIC RISKSMACROECONOMIC STABILITYMACROECONOMIC VOLATILITYMARKET ACCESSMARKET MECHANISMMARKET SHAREMATURITYMINIMUM CAPITAL REQUIREMENTSMONETARY POLICYMONEY SUPPLYNATURAL DISASTERNEGATIVE SHOCKSNOMINAL EXCHANGE RATENOMINAL INTEREST RATENON-PERFORMING LOANNPLOIL PRICESOUTSTANDING CREDITOVERNIGHT REPOPARALLEL MARKETPENSIONSPOLICY CREDIBILITYPOLICY RESPONSESPOLITICAL TURMOILPORTFOLIOPORTFOLIO FLOWSPORTFOLIO INVESTMENTPORTFOLIO INVESTMENTSPOST-CRISIS PERIODPREMATURE WITHDRAWALPRIVATE INVESTMENTPUBLIC DEBTPUBLIC FINANCEPUBLIC INVESTMENTPUBLIC SECTOR DEBTPUBLIC SECTOR DEFICITRAPID GROWTHREAL EXCHANGE RATERECURRENT EXPENDITURESREGIONAL GROWTHREGULATORY FRAMEWORKREGULATORY SYSTEMSREMITTANCESREPOREPO RATERESERVERESERVE REQUIREMENTRESERVESRETURNRETURNSRISK MANAGEMENTRISK MANAGEMENT SYSTEMSECURITY MARKETSHARE OF INVESTMENTSLOWDOWNSLOWDOWNSSOVEREIGN BONDSOVEREIGN DEBTSTATE BANKSTATUTORY FUNDSSTOCK MARKETSTOCK MARKET INDICESSTOCKSSTRONG DEMANDSTRUCTURAL PROBLEMSSTRUCTURAL REFORMSSUPPLY SHOCKSSURPLUSTAXTERMS OF CREDITTRADE AGREEMENTSTRADE BALANCETRADINGTRADING PARTNERTRANSPARENCYUNCERTAINTYWITHDRAWALReportWorld Bank10.1596/27799