Taking Stock, July 2013

Abstract

The global economy appears to be
 transitioning toward a period of more stable albeit moderate
 pace of growth. Global Gross Domestic Product (GDP), which
 slowed in mid-2012, is recovering and a modest acceleration
 in quarterly GDP is expected during the course of 2013. In
 the developing world growth remains solid, but there are
 some signs of easing. More than four years after the
 financial crisis started, global industrial output is only
 5.3 percent higher than its pre-crisis peak. While the
 global financial market conditions continue to improve,
 eventual phasing out of quantitative easing in advanced
 economies is beginning to worry investors. The improvement
 in financial conditions can be seen in lower yields on
 long-term debt, higher stock market returns and near-record
 flow of gross capital to developing countries.
 Vietnam's economy is experiencing its longest spell of
 slow growth since the onset of economic reforms in the
 late-1980s. Real GDP grew by 5 percent in 2012, the lowest
 level since 1998. The economy extended its slow growth into
 the first half of 2013, registering a growth rate of 4.9
 percent in the first quarter and 5 percent in the second
 quarter. This is the first time that Vietnam has experienced
 two consecutive years of sub-5 percent growth in the first
 half of the year since it started publishing quarterly GDP.
 In fact what had distinguished Vietnam from other countries
 is its ability to recover rapidly after an economic shock-be
 it during the East Asian crisis in 1999 or the global
 financial crisis in 2009. However, Vietnam has found it
 harder to take timely and decisive actions to jumpstart its
 economy from the current growth slowdown. Vietnam is the
 only large developing country in the East Asia and Pacific
 region other than China whose post-crisis growth rate has
 been lower than its pre-crisis level.