In 2008, the GDP target is estimated 6.5% to 7%, and would be slightly increased to 7% - 7.5% in 2009.
CPI in June 08 was reported at 26.8% year-on –year, higher than May at 25.2% year-on-year, marking the eighth consecutive month of double digit inflation. According to GSO, this is the highest level in more than a decade caused by more costly food, material price, housing & transportation. The inflation is forecasted to be 24.5% in average this year before dropping back to an average of 12% in 2009.
Trade shortfall is nearly triple in the first half of 2008 compared to the same period last year to $14.78 billion. Trade deficit in June was $1.3 billon, down from the gap of $2.85 billion in May, mostly driven by soaring oil, steel & chemical imports.
State Bank of Vietnam has widened the trading band for USD/VND, to +/- 2% around the official rate band. It also banned the trading of USD and dong via a third currency or any related fee collection.
Liquidity situation for USD in the local market is improving after several active actions from Central bank regarding FX policy. After 2 consecutive rising of VND base rate from SBV to 12% and 14%, VND liquidity onshore is very tight, with a new race of increasing deposit interest rate from local banks, especially the joint stock banks in order to mobilise funding.
Vietnam Foreign Currency reserve as stated in JUN08 was USD20.7bn, which was sufficient to cover 2.8months of 2008 imports or about 12x foreign debt. Vietnam’s total (private and public) external debt with a maturity of less than one year is USD 260m. Gross national debt of longer maturities reached 32% of GDP.
For the first half of 2008, the government has cut 10% of public spending (excluding salaries) and will make a further cut of 10% till year end.
The Vietnam Index of stock price fell on every trading day in May and June 08 stood and reached the bottom of below 400, far below the height of 1,170 that it hit in March 2007. Stock market was warmed up gradually since early JUL08.