The positive results achieved in the first quarter of 2021 together with the positive outlook for the global economy, export activities, foreign investment, public investment and especially the controlled pandemic are the main factors supporting Vietnam’s GDP growth in the following quarters.
Major financial institutions have given positive comments and assessments on the prospects of the Vietnamese economy. Accordingly, in its latest report, the International Monetary Fund (IMF) predicted that Vietnam's GDP growth would reach 6.5% in 2021, higher than the 6% growth rate of the world and much higher than the 4.9% growth rate of the ASEAN-5 (including Indonesia, Thailand, Vietnam, the Philippines and Malaysia). In 2022, the IMF forecast that Vietnam's economy would achieve a growth rate of 7.2%. Regarding Vietnam's unemployment rate, IMF expected it to decrease from 3.3% in 2020 to 2.7% in 2021, then further decrease to 2.4% in 2022.
Meanwhile, the credit rating agency Fitch Ratings also announced the rating of Vietnam's ceiling for long-term foreign currency deposits at BB and raised the outlook from "stable" to "positive". This shows Vietnam's resilience over the past year has been recognized. At the same time, Fitch Ratings forecast that Vietnam's growth would reach about 7% in 2021 and 2022.
However, Vietnam’s economy is basically still facing many challenges. In particular, the biggest challenge is the resilience of the economy if there is another Covid-19 epidemic outbreak, while the endurance of the economy depends heavily on the support policies of the government.
Currently, Vietnam’s economy is on a rapid and obvious recovery. Credit growth reached 2.93% at the end of the first quarter, which is a rapid increase compared to the 1.5% increase on March 19, 2021 and much higher than the 1.3% increase of the same period last year. With this development, it is likely that credit growth will accelerate in the second quarter of 2021.
Exchange rate
In the past week, the USD / VND exchange rate increased on the official yet experienced a sharp decrease on the unofficial markets. At VCB, compared to the previous week, the exchange rate of USD / VND increased by 10 VND / USD to 22,970 VND / USD (purchased) and 23,180 VND / USD (sold), respectively. Compared to the beginning of 2021, the USD / VND has decreased by 10 VND / USD.
On the unofficial market, the USD / VND exchange rate decreased by 100 VND / USD on both buying and selling sides, to 23,800 VND / USD and 23,850VND / USD, respectively.
At the State Bank of Vietnam, the USD / VND exchange rate was stable at 23,125 VND / USD, which is 793 VND / USD lower than the ceiling price. Compared to the previous week, the USD exchange rate on the selling side decreased by 16 VND / USD to 23,868 VND / USD and was 50 VND / USD lower than the ceiling price.
Meanwhile, the central exchanged rate announced by the State Bank applicable to April 8, 2021 was 23,221 VND / USD, down 21 VND / USD compared to the rate announced the previous week.
The USD / VND exchange rate has generally been maintained stable since the beginning of the year due to stable supply and demand. The foreign exchange reserve of the State Bank is still able to supply the needs of importing businesses. Foreign currency supply is believed to remain abundant in 2021, when FDI is expected to flow strongly into Vietnam.
In the coming time, the USD / VND exchange rate will not have strong fluctuations. The State Bank will manage the monetary policy proactively and flexibly in harmony with the macroeconomic policies to control inflation, maintain macro stability, and support economic recovery. At the same time, the State Bank will also operate the exchange rate flexibly, in accordance with the domestic and foreign market situation, macro balances and monetary policy goals, and increase the state’s foreign exchange reserves when market conditions are favorable.
Gold price
World gold price remained high while the dollars decreased. The US economy still faces many difficulties.
Gold price is expected to continue to increase. The USD tends to decrease compared to many other currencies, despite the positive recovery of the US economy. Great demand in the US post Covid-19 pandemic could cause inflation to rise. A weak dollar will pull up the price of gold. However, there may be no strong increase in gold prices. Strong recovery of the world economy will make gold prices decrease. The International Monetary Fund (IMF) raised its forecast for global economic growth in 2021 from 5.5% to 6.0%, which helped reduce demand for gold. Since the beginning of 2021, gold investment funds have sold about 217 tons of gold. Besides, the value of this metal is now under pressure as Asian stock hit a three-week high, reducing investors' demand for gold bars.
At the end of the week, spot gold price was 1,737 USD / oz. Gold futures price in June 2021 on Comex New York was1,741 USD / oz. On the Kitco trading exchange, gold prices were 1,736.9 – 1,737.9 USD / oz.
World gold price was about 49.3 million VND / tael, which is 6.0 million VND lower than the domestic gold price.
The domestic gold prices increased in line with world gold prices. In Hanoi, SJC gold price increased by 450 thousand VND / tael on both selling and buying sides, to 54.90 – 55.32 million VND / tael.
Source: Ministry of Industry and Trade
Compiled by VietnamCredit
