Fall in price of crude oil would positively influence the Vietnameseeconomy, helping the country gain stronger growth in 2015, commented anarticle posted in The Diplomat, a magazine specialising for theAsia-Pacific region affairs.
The article, run on December 23,said given the fact that crude oil exports account for about 10 percentof Vietnam ’s state budget, Minister of Planning and Investment BuiQuang Vinh held that at each US dollar drop in the price per barrelwould mean a concurrent drop of between roughly 46 USD to 56 million USDin the budget.
The country is now much less reliant on oilexports for revenues than it was before, with the current 10 percent afar cry from the previous 20-25 percent rate, stated Vinh.
Thearticle quoted experts’ opinions as predicting that the impact on theState budget may also be offset in 2015 by other positive effects oneconomic growth for Vietnam , which exports around 16 milliontons of crude oil but also imports 10 million tons of petroleumproducts annually. Reduced spending on imported petroleum products maymean lower inflation in 2015.
All in all, Glen B. Maguire, ANZbank’s chief economist for the Asia-Pacific, said the oil price wouldhave negligible impact on GDP growth in Vietnam in 2015 relative toother economic factors. Maguire said he expects that even if theoil price declines by 10 percent for four successive quarters, Vietnam’sGDP will only lose 0.1 percent while inflation would be cut by 2.6 to2.7 percent.
Meanwhile, the Asian Development Bank recentlyraised Vietnam ’s projected GDP for 2015 from 5.7 percent to 5.8percent, citing loosened credit conditions and improved domesticinvestment.
Frontier Strategy Group (FSG) predictsthat Vietnam ’s GDP growth in 2015 could rise from the currentforecast of 5.9 percent to 8.5 percent, and that oil prices stabilisingat 50 USD per barrel in 2015 could in fact propel this rate to over 10percent. FSG attributes this to significant improvements in consumerspending power and business margins.
The Vietnamese governmentcould also take steps to help mitigate potentially negative economiceffects. Already, earlier this month the Ministry of Finance raisedtariff caps on petroleum products to help offset a state budgetdeficit.
Other measures could be mulled, including selectivelyreducing drilling activities if prices fall further as it would reducethe profitability of some oil exploitation for companies likethe national oil and gas giant PetroVietnam. This could prove trickier,however, as Vinh, the minister, said that a reduction of oiloutput by 30 percent would cause GDP to fall by between 0.8 to 1.2percent in 2015./.
The article, run on December 23,said given the fact that crude oil exports account for about 10 percentof Vietnam ’s state budget, Minister of Planning and Investment BuiQuang Vinh held that at each US dollar drop in the price per barrelwould mean a concurrent drop of between roughly 46 USD to 56 million USDin the budget.
The country is now much less reliant on oilexports for revenues than it was before, with the current 10 percent afar cry from the previous 20-25 percent rate, stated Vinh.
Thearticle quoted experts’ opinions as predicting that the impact on theState budget may also be offset in 2015 by other positive effects oneconomic growth for Vietnam , which exports around 16 milliontons of crude oil but also imports 10 million tons of petroleumproducts annually. Reduced spending on imported petroleum products maymean lower inflation in 2015.
All in all, Glen B. Maguire, ANZbank’s chief economist for the Asia-Pacific, said the oil price wouldhave negligible impact on GDP growth in Vietnam in 2015 relative toother economic factors. Maguire said he expects that even if theoil price declines by 10 percent for four successive quarters, Vietnam’sGDP will only lose 0.1 percent while inflation would be cut by 2.6 to2.7 percent.
Meanwhile, the Asian Development Bank recentlyraised Vietnam ’s projected GDP for 2015 from 5.7 percent to 5.8percent, citing loosened credit conditions and improved domesticinvestment.
Frontier Strategy Group (FSG) predictsthat Vietnam ’s GDP growth in 2015 could rise from the currentforecast of 5.9 percent to 8.5 percent, and that oil prices stabilisingat 50 USD per barrel in 2015 could in fact propel this rate to over 10percent. FSG attributes this to significant improvements in consumerspending power and business margins.
The Vietnamese governmentcould also take steps to help mitigate potentially negative economiceffects. Already, earlier this month the Ministry of Finance raisedtariff caps on petroleum products to help offset a state budgetdeficit.
Other measures could be mulled, including selectivelyreducing drilling activities if prices fall further as it would reducethe profitability of some oil exploitation for companies likethe national oil and gas giant PetroVietnam. This could prove trickier,however, as Vinh, the minister, said that a reduction of oiloutput by 30 percent would cause GDP to fall by between 0.8 to 1.2percent in 2015./.
