Vietnam’s economic situation for the year 2007

The basic favorable condition for Vietnam when entering 2007 is that after over 20 years of renovation, the position and power of the economy as well as experience in organizing, managing and operating the socialism directed market economy have been increased considerably. Being a member of WTO has created more opportunities for Vietnam economy to integrate more deeply and widely with the world economy. Meanwhile, there are many difficulties and challenges: the economy remains shortcomings with low growth quality, business efficiency and competition and high price of imported materials for domestic production. In the last months of the years, there happened unexpected difficulties such as typhoons, floods, acute diarrhea, blue ear disease of pig, re-out breaking of bird-flu in some localities. However, under the leadership of the Party and State and drastic and effective measures taken by the Government, most socio-economic indicators have been met or over passed National Assembly‘s demands; the economy continues developing, social and political issues have been stable. Followings are detail results for main sectors:

1. Gross domestic products (GDP)

According to preliminary estimate, Gross domestic products (GDP) in 2007, were estimated at 1994 constant prices increasing by 8.48% against 2006; achieving the set plan (8.2 – 8.5%). The agriculture, forestry and fishery sector increased by 3.41% (the plan for this sector was 3.5 – 3.8%); the industry and construction by 10.6%, achieving the set plan (10.5 – 10.7%) and the service by 8.68%, beyond the set plan (8.0 – 8.5%). The 2007 economic growth rate of Vietnam is listed in the rank of high growth economies in the region. (According to the assessment from ADB in 2007 the growth rate of China was 11.2%; Vietnam: 8.3%; Singapore: 7.5%; Philippines: 6.6%; Indonesia: 6.2%; Malaysia: 5.6%; Thailand: 4%).

2. Investment and Development

Realized investment for development in 2007 at current prices was estimated achieving 461.9 trillion VND, equaling 40.4% of GDP (achieving the set plan 40% GDP) and increasing by 15.8% against 2006. Of the total investment, state sector gained 200 trillion VND, accounting for 43.3% and rising by 8.1%; non-state investment 187.8 trillion VND, accounting for 40.7% and rising by 24.8%; FDI investment 74.1 trillion VND, accounting for 16% and rising by 17.1%.

Of the State investment capital, investment under State budget (including project and program budgets) was estimated gaining 97 trillion VND, equaling 101.6% of the yearly plan. Of which budget under local management was 64.4 trillion VND, equaling 107.2%; budget under central management was lower than the yearly estimate, equaling only 92.2%; the state credits for investment development were estimated achieving 40.3 trillion VND, gaining the yearly plan; 62.7 trillion VND from state owned enterprises and other state organizations. FDI continued increasing rapidly, achieving 20.3 billion USD in 2007, rising by 69.3% against 2006 and beyond 56.3% of the yearly plan, of which newly granted license capital was 17.86 billion USD.

3. Government revenues and expenditures

Total government revenues in 2007 were estimated increasing by 16.4% against 2006 and achieved 106.5% of the yearly estimate. Of which, domestic revenues gained 107%; trade budget revenues: 108.1%; aid revenues: 156.7%. Privately revenues from crude oil only achieved 102.1% against the yearly estimate and lower than last year due to the decrease in crude oil production.

Total government expenditure in 2007 was estimated increasing by 17.9% against 2006 and achieving 106.5% of yearly estimate, of which spending for investment and development rose by 19.2% and gaining 103.2%, current expenditure  rose by 15.1% and gained 107.2%, debt and aid settlement by 20.5% and achieving the yearly plan. The state budget overspending was 14.8% of the total expenditure and equaling the approved level by the National Assembly, of which 76.1% made up with the domestic loans and 23.9% made up with the oversea loans.

4. Agriculture, forestry and fishery

Output values of this sector in 2007 were estimated at constant 1994 prices achieving nearly 200 trillion VND, increasing by 4.6% against 2006; of which agriculture rose by 2.9%; forestry by 1%; fishery by 11%. Due to the consequences of typhoons, floods in many localities and diseases for plants and animals, the increases in input costs, especially animal husbandry costs, the values added of this sector only rose by 3.41% against last year, of which agriculture increased by 2.34%; forestry by 1.1% and fishery by 10.38%. Details are as follows:

a. Agriculture

The average paddy yield for 3 crops achieved 35.87 million tons, increasing by 0.1% against last year. Of which the yield of winter-spring rice was 17.03 million tons, falling by 3.2% (cultivated areas fell by 0.2%, productivity by 3%); the yield of summer-autumn rice was 10.11 million tons, rising by 4.3% (productivity rose by 9.6%, which compensated for the decrease in cultivated areas); the winter rice was 8.73 million tons, increasing by 1.9% (productivity rose by 2.1%, cultivated areas slightly fell). The year 2007 is also a bumper harvest year for maize with the yield of 4.11 million tons, rising by 8.2% over 2006. Generally, the yield for both rice and maize gained nearly 40 million tons, rising by 0.8% against last year.

The production of annual industrial plants such as jute, sugar cane, peanut and soybean increased over last year due to an increase in both cultivated areas and productivity. Only coffee, though the cultivated areas rose by 1.9% but due to harmful insects, productivity was low that made the yield fall by 2.4%.

Livestock feeding continuously developed. However, the rate did not raise highly, stably and evenly among localities. According to the livestock feeding survey result of 01/8/2007, the country had nearly 3 million buffalo heads, increasing by 2.6% against 2006; 6.7 million cattle heads, rising by 3.3%; 226 million poultries, growing by 5.3%. Although the blue ear disease has been controlled, total pig heads were nearly 26.6 million only, decreasing by 1.1% against 2006, of which Hai Duong decreased by 29.6%; Long An by 22.2%; Da Nang by 17.6%; Hau Giang by 17.2%; Binh Thuan by 16.7%; Soc Trang by 14.9%; Can Tho by 14.6%; Bac Ninh by 12.8%; Hai Phong by 12.2% and Dong Nai by 10.5% …

b. Forestry: The area of concentrated forestation was estimated to achieve 194.7 thousand ha, increasing by 1% over last year; reforestation: 969.3 thousand ha, increasing by 1.2%; protected areas: 487.2 thousand ha; decreasing by 4.7%. Thanks to the strengthening of forestation and reforestation, in 2007 the country had nearly 12.85 million ha, rising by 311 thousand ha against 2006, bringing the greening coverage area from 37.9% in 2006 to 38.8% in 2007 (the set plan was 39%).

c. Fishery:

Total fishery production value in 2007 at 1994 constant prices was estimated achieving 46.7 trillion VND, increasing by 11% over last year, of which aquaculture rose by 16.5% and catching by 2.1%. The yield of fishery of 2007 was estimated at 4.15 million tons, rising by 11.5% against 2006, of which aquaculture gained 2.09 million tons, rising by 23.1%, due to increase in both cultivated areas and productivity (chiefly provinces in Mekong River Delta); catching: 2.06 million tons, rising by 1.8%. Of the total, fish production accounted for 74%; equaling 3.1 million tons and rising by 13.5%; shrimp production about 500 thousand tons and rising only by 7.6%.

5. Industrial output

The industrial growth rate in 2007 continuously remained highly, especially the non-state and FDI sectors. Industrial output value was estimated at 1994 constant prices increasing by 17.1% against last year. Of which state owned sector increased by 10.3% (central management by 13.3%, local management by 3%); non-state sector by 20.9% and FDI sector by 18.2%. The reason for rather low growth rate of state owned enterprises (SOEs) is due to the rearrangements and privatization, the number of SOEs reduced. Non-state sector still remained the highest growth rate mainly due to new Enterprise Law that facilitated the development in the private sector.

Among 3 one-digit industries, output value of processing industry accounted for 87.6%, rising by 19.1%; electricity, gas and water production and supply for 5.6%, increasing by 12.8%; mining for 6.8%, falling by 1.1% against 2006, mainly due to decrease in crude oil production.

Main items in 2007 had higher rate over 2006: machine tool rose by 69.8%; automobile by 52.8%; air-conditioner by 51.9%; electric motor by 24.3%; motorbike by 23.9%; washing machine by 21.3%; beer by 19.2% and electric fan by 18.6%. Besides that, some items had lower or even decreased growth rates: processed seafood rose by 12.6%; cement by 11.8%; pure coal by 11.5%; rolled steel by 10.8%; crude oil fell by 7.8% and liquefied gas by 10.2%.

Localities with large scale industry production still maintained higher rates than the general growth rate of 17.1%: Vinh Phuc rising by 41.4%; Binh Duong by 25.3%; Ha Tay by 25.1%; Can Tho by 23.4%; Dong Nai by 22.4%; Ha Noi by 21.4%; Da Nang by 19.7% and Hai Phong by 18.2%. Privately Ho Chi Minh City only rose by 13.8% and Ba Ria – Vung Tau fell by 1.2%.

6. Trade, price and tourism

a. Domestic commerce

Domestic commerce developed with varieties of business types that contributed to improve the modern, civilized and diversified market structure for better supplying the need of production and consumer of the people. Total retail sales of goods and services in 2007 were at current prices estimated at 726.1 trillion VND; increasing by 23.3% over 2006, of which individual sector accounted for 56.2% and rose by 25.9%; the private sector: 28.8% and 30.3% respectively, but state sector accounted for 10.9%, decreased by 1.3%. By business activity, the trade had proportion of 80.7% and increasing by 22.6% against 2006; hotel and restaurant accounted for 11.9%, rising by 23.5%; service accounting for 6.3%, rising by 30.5% and tourism accounting for 1.1%, rising by 34.5%.

b. Prices

Consumer prices in 2007 occurred complicatedly and increased highly in the last months. Consumer prices in December rose by 2.91% over last month.

As compared with December 2006, consumer prices in 2007 increased by 12.63%, of which prices of food and eating service rose  by 18.92%; housing and construction materials by 17.12% and others rising from 1.69% to 7.27%.

As compared with last year, average consumer price in 2007 rose by 8.3%, of which prices of food and eating service grew by 11.16%; housing and construction materials by 11.01% and others only by 3.18 – 6.15%.

c. Commodity and service import, export

Exported commodity value in 2007 was estimated gaining nearly 48.4 billion USD, rising by 21.5% against 2006, of which all main export items increased (including crude oil rose by 2.6% due to the increase in price). There were 10 items gaining export value of over 1 billion USD: crude oil achieving 8.5 billion USD, textiles: 7.8 billion USD, footwear: nearly 4 billion USD, seafood: 3.8 billion USD, rising by 12.9%; wood products: 2.4 billion USD, rising by 22.3%; electronic and computer: 2.2 billion USD, by 27.5%; coffee: 1.8 billion USD, by 52.3%; rice: 1.4 billion USD, by 11.3%. Export market continuously developed, almost big markets increased against last year. In 2007, there were 10 export markets gaining export value of over 1 billion USD, of which America gaining 10 billion USD, EU: 8.7 billion USD; ASEAN: 8 billion USD; Japan: 5.5 billion USD and China 3.2 billion USD. Besides that in 2007 some markets like Australia and Iraq fell.

Import turnovers in 2007 was estimated at 60.8 billion USD, rising by 35.5% against 2006, of which the domestic sector gained 39.2 billion USD, rising by 38.1%; the FDI sector was 21.6 billion USD, growing by 31%. Commodities had high import value in 2007: machines, equipments, tools, spare parts gaining nearly 10.4 billion USD, rising by 56.5%; petroleum oil: 7.5 billion USD, by 25.7%; steel: nearly 4.9 billion USD, by 66.2%; textile fabrics: 4 billion USD, by 33.6%; electronic, computer and spare parts: 2.9 billion USD, by 43.7%; plastic: 2.5 billion USD, by 34.3%; auxiliary materials for garment, sewing and leather: 2.2 billion USD, by 12.1%; chemicals: 1.4 billion USD, by 39.1%; motor vehicles: 1.4 billion USD, by 101%; chemical products: nearly 1.3 billion USD, by 27.1%; cattle food and auxiliary materials: 1.1 billion USD, by 52.6%, wood and wood auxiliary materials: nearly 1 billion USD, by 31.9%.

Trade deficit in 2007 achieved 12.4 billion USD, equaling 25.7% of export value and nearly 2.5 times as much as the trade deficit rate of 2006. Import value and trade deficit of 2007 increased highly is due to (1) high demand for imports for economic development. Privately, importation of machinery, equipment and spare parts accounted for 17.1% of total import value and contributed 23.5% to the general growth rate; petroleum also accounted for 12.3% and contributed 9.6%. (2) Prices of many imported items increased highly: steel by 23.1%; fertilizer by 19.1%; petroleum by 12.2%; plastic by 9.6%. Additionally, the depreciation of USD against other currencies in international markets was also a factor to raise the import value when converting local currency into USD.

Service trade turnovers in 2007 were estimated at 12.4 billion USD, rising by 21.6% against 2006, of which service export gained 6 billion USD, rising by 18.2% and service import including CIF (cost, insurance and freight) was 6.4 billion USD, growing by 24.9%.

d. International arrivals to Vietnam in 2007 were estimated at 4.23 million, increasing by 18% against 2006. Of which arrivals for tourism and relaxing were 2.61 million, accounting for 61.6% and rising by 26%; for business purpose: 673.8 thousand, accounting for 15.9% and increasing by 17%; for visiting relatives: 601 thousand, accounting for 14.2% and by 7.1%, for other purposes reducing by 7.7%.

China was the leading country in volume of visitors to Vietnam, estimated achieving 574.6 thousand, accounting for 13.6% of the total arrivals and rising by 11.3% over last year. Countries and regions with large volume of visitors to Vietnam were South Korea with 475.4 thousand visitors, increasing by 12.7%; United State: 408.3 thousand visitors, by 5.9%; Japan: 418.3 thousand visitors, by 9%; Taiwan: 319.3 thousand, by 16.2% and Australia: 224.6 thousand visitors, by 30.2%. Some other countries with a smaller amount of visitors but high consumption gained relative higher growth rates than in 2006: Russia Federal rose by 50.5%; Italy by 43%; New Zealand by 39.2%; Netherlands by 37.9% and Belgium by 32.5%.

e. Transport

Passengers carriage in 2007 was estimated at 1535.5 million and 67.2 billion passengers-kilometers, increasing by 8.4% in passengers and 8.6% in passengers-kilometers against last year. Of which transport by land – an important role (accounted for 86.6% of total passengers and 66.2% of total passengers-kilometers), rose by 9.4% in passengers and 9.1% in passengers-kilometers against 2006.

Volume of cargos carried in 2007 was estimated at 378.6 million tons and 95.1 billion tons-kilometers, increasing by 8.1% in tons and 7.4% in tons-kilometers against last year. Of which units under central management gained 51.8 million tons and 61.7 billion tons-kilometers, rising by 6.8% in tons and 7.1% in tons-kilometers; units under local management achieved 326.8 million tons and 33.4 billion tons-kilometers, increasing by 8.3% and 7.8% respectively.

In 2007, the transport faced a lot of difficulties such as high fuel costs that resulted in increase in transport fares; continuous natural disasters and floods that inundated and eroded many parts of railway and important national way. Owing to timely and effective direction of the transport and local authorities, the transport still met people’s demand for production and traveling.

However, traffic accident is still a problem of great concern. Generally, for 11 months of 2007, there had 13.3 thousand traffic accidents, killing 11.9 thousand and injuring 9.9 thousand. As compared with 11 months of 2006, number of accidents increased by 0.48%; the number of death rose by 3.85%; number of injured people reduced by 3.45%. On average each day in 11 months, there occurred 40 accidents, killed 36 and wounded 30.

The reason is due to people’s low consciousness to follow the traffic regulations; rapid increase in newly registered means of transport with unmatched infrastructure building. Therefore, it is necessary to focus on taking drastic measures and synchronous implementation in the whole political system to effectively act upon the Government Resolution No 32/200/NQ-CP dated 29/6/2007 on some urgent solutions to curb traffic accident and traffic jam.

f. The Post and Telecommunication:

In 2007, activities of this sector continued developing rapidly. The number of new telephone subscribers in 2007 was estimated achieving 18.5 million (nearly equivalent to the total subscribers in 2004, 2005, 2006), totaling the number of subscribers over the country as end of December 2007 to 46 million. The number of new internet subscribers for 2007 were estimated at 1.18 million. Up to now, there have been 18.2 million internet users, accounting for 21.4% of the country population.

Tags: Vietnam economic 2007, Vietnam economic statistics, Vietnam's economy situation