Seven forecasts for Foreign direct investment (FDI) would still be the “lifebuoy” for the national economy in 2014. Clik here to view.  GDP growth rate modest, inflation high The prediction proves to be reasonable if noting that the ratio of the total investment capital of the society on GDP in 2014 would be some 30 percent, the same as 2013. The GDP growth rate of around 5 percent is not a good result for a developing economy with young and profuse resources like While the expected growth rate is modest, the inflation rate in 2014 is thought to be much higher than this year, because fiscal and monetary policies would be loosened to foster the growth. The global economy recovery, though at a slow pace, would also lead to the goods price increases, which would be a hard pressure on the domestic prices. The The higher inflation rate projected for 2014 would make the local currency depreciate. The US FED is about to end the quantitative easing package, which would lead to the stronger greenback and result in the dong depreciation. However, the FDI, ODA and not too big trade deficit would support the dong value. Therefore HSBC believes the dong/dollar exchange rate would stay at VND21,500 per dollar in 2014. Another difficult year for domestic enterprises A report showed that by the end of November 2013, nearly 55,000 businesses had got dissolved or stopped operation, the figure which is even higher than that of both 2011 and 2012. The enterprises’ situation may not be considerably improved in 2014--once the biggest problems, including the market low demand, tightened credit, low competitiveness and frozen real estate market have still not been settled. FDI will help develop economy While the domestic economic sector would still be stagnating, FDI is believed to serve as the lifebuoy for the national economy. Analysts have every reason to believe in the continued strong FDI flow in 2014. The cheap labor cost, the large market with 90 million consumers--the big benefits to be brought by trade agreements such as TPP and AEC would all support Especially, Bad debts would increase Though the Vietnam Asset Management Company (VAMC) has been established, it has bought trillions of dong worth of bad debts so far. The Circular No. 02, after some delay, would take effect again on June 1, 2014, which, with stricter requirements on debt classification, would lead to the sharp increase of bad debts. More M&A deals to be made There are many reasons that would encourage merger and acquisition (M&A) activities in 2014. The government has shown its stronger determination in the restructuring of state owned enterprises (SOEs). Deputy Prime Minister Hoang Trung Hai has stated Property market would remain frozen Experts believe that the real estate market would be cool in 2014 due to the increasingly high supply and weak demand. Mai Chi, |
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Article 14
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