Jan 28, 2011
Perspective:1980 to 2005
- The major economic downturn in Vietnam began in 1980-1990.
- The economy was suffering from hyper-inflation.
- After major banking reform, a recovery began into the new millennium.
Twin Shocks: 2006-2007
1. Huge foreign investment growth pushed prices upwards and increased trade deficit.
2. Global financial recession hit the country.
- Inflation remerged as Vietnam made efforts to recover from the recession.
- Vietnam has been successful in triggering its economic growth + the process of recovery is gradual.
- Two factors restricting growth: 1) the current account deficit 2) inflation
The Future: 2011-2012
- Future policy reforms will focus on:
- Restructuring SOE's (state owned enterprises), in order maintain fiscal balance and reduce public debt in 2011 as well as in 2012.
- The Central Bank will try to contain inflation by controlling credit growth via hike in interest rate and following flexible exchange rate in 2011.
Alpha Returns in the Cycle:
- With the tightening of the capital markets, fund managers have been able to make new investments without raising additional capital.
- The level of exits that have been actually achieved by the fund managers is of significant importance to the industry.