Taking Stock, June 2011 : An Update on Vietnam's Recent Economic Developments
In 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...
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| Language: | English en_US |
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Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/498461468329442718/Taking-stock-an-update-on-Vietnams-recent-economic-developments http://hdl.handle.net/10986/27799 |
| Summary: | In 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. |
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