IMF Executive Board Concludes 2023 Article IV Consultation with Vietnam
IMF News, September 27, 2023
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- Published: September 27, 2023
Macroeconomic performance and outlook
- 2022 recovery:
- GDP rose by a historically high 8 percent—the highest since the 1990s.
- Average inflation (period average) in 2022: 3.7 percent; CPI period average for 2022 recorded as 3.7 percent in indicators and elsewhere described as kept at 3.2 percent (average inflation).
- 2023 developments:
- Growth is expected to slow to 4.7 percent in 2023—supported by a rebound in exports and expansionary (especially fiscal) policies.
- Inflation is expected to remain contained below the 4.5 percent ceiling.
- Exchange rate pressures and financial stress emerged in late 2022 and continued into 2023, including a deposit run at a major domestic bank in October 2022 that led to State Bank of Vietnam control.
- Exports declined by 12 percent in the first half of 2023.
Headwinds and risks
- Sources of stress:
- Tighter funding conditions, slowdown in real estate sales, and legal hurdles produced financial stress among real estate developers.
- Corporate bond market froze amidst a loss of investor confidence.
- Exchange rate pressures as global interest rates rose sharply.
- Sharp deterioration in external demand since late 2022.
- Risk outlook:
- Directors noted that risks remain elevated and further efforts are required to safeguard macro-financial stability.
- Continued capacity development will be important to support reforms.
Executive Board assessment — policy guidance and priorities
- Fiscal policy:
- With ample fiscal space and limited room for monetary policy loosening, fiscal policy should take the lead in supporting economic activity if needed.
- Directors welcomed plans to speed up implementation of public investment, which will require tackling bottlenecks.
- Importance stressed of expanding social safety nets to support the most vulnerable.
- Recommendation to strengthen the fiscal framework and budget process and increase revenue mobilization over the medium term.
- Monetary and exchange rate policy:
- Directors commended authorities for effectively containing inflation risks but advised monetary policy should continue to be cautious under a complex environment and limited policy space.
- Steps toward greater exchange rate flexibility were welcomed and continued progress encouraged.
- Recommendation to modernize the monetary policy framework.
- Financial sector resilience:
- Importance of bolstering capital buffers, phasing out regulatory forbearance, and addressing rising non-performing loans.
- Need to enhance the authorities’ toolkit to prevent and manage banking crises by strengthening the resolution and emergency liquidity frameworks.
- Ongoing revision of the law on credit institutions was welcomed; efforts to strengthen bank regulation and supervision should continue.
- Real estate and corporate bond markets:
- Directors acknowledged authorities’ swift actions to contain risks and urged decisive steps to address remaining risks, including strengthening the insolvency framework, bolstering institutions, and increasing transparency in the corporate bond market.
- Structural and climate reforms:
- Structural reforms and climate policies are key to achieve sustainable, green, and inclusive growth and to accelerate the transition to upper-middle income status.
- Required actions include improving the business environment, stepping-up critical infrastructure, and investing in human capital.
- Directors welcomed the latest Power Development Plan and the planned Emissions Trading System.
- Recommendation to develop an appropriate regulatory framework to promote investment in renewable energy and secure funding for the green transition.
- Conducting a Climate-Public Investment Management Assessment would be useful.
- Governance and data:
- Directors welcomed anti-corruption efforts and emphasized continuing to strengthen governance, improve the AML/CFT framework, and simplify regulatory frameworks.
- Greater efforts in closing data gaps will be important.
Selected economic indicators and key statistics (2019–2024, as published)
- Output
- Real GDP (percent change): 2019: 7.4; 2020: 2.9; 2021: 2.6; 2022: 8.0; 2023: 4.7; 2024: 5.8
- Output Gap (percent of GDP): 2019: 0.4; 2020: -0.4; 2021: -1.9; 2022: -0.1; 2023: -1.1
- Prices (percent change)
- CPI (period average): 2019: 2.8; 2020: 3.2; 2021: 1.8; 2022: 3.7; 2023: 3.5; 2024: [blank in table]
- Core inflation (period average): 2019: 2.0; 2020: 2.3; 2021: 0.9; 2022: 2.7; 2023: 4.2; 2024: 3.4
- Saving and investment (in percent of GDP)
- Gross national saving: 2019: 35.6; 2020: 36.3; 2021: 31.3; 2022: 33.1; 2023: 32.4
- Gross investment: 2019: 32.0; 2020: 31.9; 2021: 33.5; 2022: 33.4; 2023: 32.1; 2024: 31.8
- Private investment: 2019: 26.6; 2020: 24.9; 2021: 27.2; 2022: 27.4; 2023: 25.5; 2024: 24.8
- Public investment: 2019: 5.3; 2020: 7.0; 2021: 6.2; 2022: 6.0; 2023: 6.6
- State budget finances (in percent of GDP) 1/
- Revenue and grants: 2019: 19.4; 2020: 18.4; 2021: 18.7; 2022: 19.0; 2023: 18.5
- Expenditure: 2019: 19.8; 2020: 21.3; 2021: 20.1; 2022: 18.8; 2023: 19.6; 2024: 20.2
- Expense: 2019: 14.5; 2020: 14.3; 2021: 13.9; 2022: 12.8; 2023: 13.0; 2024: 13.2
- Net lending (+)/borrowing(-) 2/: 2019: -2.9; 2020: -1.4; 2021: 0.3; 2022: -1.3; 2023: -1.7
- Public and publicly guaranteed debt (end of period): 2019: 40.8; 2020: 41.1; 2021: 39.1; 2022: 35.3; 2023: 33.6; 2024: 32.3
- Money and credit (percent change, end of period)
- Broad money (M2): 2019: 14.8; 2020: 10.7; 2021: 6.1; 2022: 6.9
- Credit to the economy: 2019: 11.6; 2020: 13.5; 2021: 14.0; 2022: 9.0; 2023: 9.7
- Balance of payments (in percent of GDP, unless otherwise indicated)
- Current account balance (including official transfers): 2019: 4.3; 2020: -2.2; 2021: -0.3; 2022: 0.2; 2023: 0.7
- Exports f.o.b.: 2019: 79.6; 2020: 81.6; 2021: 90.9; 2022: 91.4; 2023: 80.9
- Imports f.o.b.: 2019: 73.2; 2020: 72.7; 2021: 86.7; 2022: 85.0; 2023: 75.8; 2024: 75.1
- Capital and financial account 3/: 2019: 5.7; 2020: 2.4; 2021: 8.3; 2022: 2.5
- Gross international reserves (in billions of U.S. dollars) 4/: 2019: 78.5; 2020: 95.2; 2021: 109.4; 2022: 98.7; 2023: 110.5
- In months of prospective GNFS imports: 2019: 3.3; 2020: 3.1; 2021: [blank]
- Total external debt (end of period): 2019: 37.0; 2020: 37.6; 2021: 37.9; 2022: 36.2; 2023: 36.6; 2024: 36.5
- Nominal exchange rate (dong/U.S. dollar, end of period): 2019: 23,173; 2020: 23,098; 2021: 22,826; 2022: 23,633
- Memorandum items (current prices)
- GDP (in billions of U.S. dollars): 2019: 331.8; 2020: 346.3; 2021: 369.7; 2022: 406.5; 2023: 438.2; 2024: 476.9
- Per capita GDP (in U.S. dollars): 2019: 3,439; 2020: 3,549; 2021: 3,753; 2022: 4,087; 2023: 4,365; 2024: 4,707
Institutional/administrative notes
- The next Article IV Consultation with Vietnam is expected to be held on the standard 12-month cycle.
- Footnotes in the original release clarify statistical conventions, exclusions, and that gross international reserves exclude government deposits.
IMF Executive Board Concludes 2023 Article IV Consultation with Vietnam — Press Release No. 23/325 (September 27, 2023).
