By Jason Simpkins
Managing Editor
Money Morning
While it's not quite the economic force that China is, Vietnam's economy grew by 4.5% year-over-year in the second quarter and the nation's stock market rallied 60%, making it the best performer in Asia.
The national Statistics Office said yesterday (Wednesday) that Vietnam's gross domestic product (GDP) growth accelerated to 4.5% in the second quarter from 3.1% in the first.
Policymakers in Vietnam employed a $956 million (17 trillion dong) stimulus program to overcome a drop in exports that could have crippled growth. Exports, which account for 15%-20% of Vietnam's GDP, fell 10% year-over-year in the first half.
"Although the crisis has exerted negative impacts on the economy, it has also offered opportunities to Vietnam," Finance Minister Vu Van Ninh told the Financial Times. "The drastic drop in exports for instance indicates that the government should increase its investment and come up with stronger incentive policies to boost the domestic market, especially in rural areas. This is a good opportunity for businesses to invest in fixed assets, human resources training and competitiveness enhancement to proactively foster production and business when the world economy recovers."
Vietnam's stock market reflected the government's effort, as the nation's benchmark VN Index surged 60% in the second quarter, making it the best performing index in Asia, according to Bloomberg News. The VN Index is up 42% this year, ninth in the world.
Vietnam's stock market value is set to grow by at least 10% as the government resumes selling shares in state-owned companies through its "doi moi" privatization process.
Bao Viet Insurance & Finance Group, Vietnam's biggest insurer, listed on the main Ho Chi Minh City Stock Exchange last week, and Joint-Stock Commercial Bank for Foreign Trade of Vietnam, the nation's third-biggest bank by assets, listed yesterday.
Foreign investors bought 59 million shares on the Ho Chi Minh City Stock Exchange in June, and 71 million in May, up from 19 million in January, according to data on the exchange's Web site.
The 161 companies on the exchange are worth $16 billion (286 trillion dong). The daily value of shares traded on the Ho Chi Minh City Stock Exchange rose to a record 3.3 trillion dong on June 10, Bloomberg reported, up from 130 billion dong at the start of the year.
"I believe that the worst impacts of the crisis on Vietnam are over," Ninh told the FT. "Though certain difficulties would remain in the last months of 2009, I am confident in a recovery of the economy soon."
News and Related Story Links:
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Money Morning:
China's Not The Only Red-Hot Economy In the East: Why Vietnam Is Asia's Hidden Dragon
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Financial Times:
Vietnam sees opportunities amid the crisis