Annual Report. June Countercyclical Support Facility: Macroeconomic and Fiscal Policy Updates, 2010

Transcription

1 Annual Report June 2011 Countercyclical Support Facility: Macroeconomic and Fiscal Policy Updates, 2010

2 CURRENCY EQUIVALENTS (Annual average for 2010) Currency Unit taka (Tk) $1.00 = TK69.2 Currency Unit rupiah (Rp) $1.00 = Rp9,084.6 Currency Unit tenge (T) $1.00 = T147.4 Currency Unit peso (P) $1.00 = P45.1 Currency Unit dong (D) $1.00 = D19,589.0 ABBREVIATIONS ADB Asian Development Bank CSF Countercyclical Support Facility GDP gross domestic product US United States NOTE In this report, "$" refers to US dollars. Director General Director Team leader Team members K. Sakai, Strategy and Policy Department (SPD) I. Bhushan, Director, Strategy, Policy, and Interagency Relations Division, SPD K. Takamiya, Senior Planning and Policy Economist, SPD M.J. David, Strategy and Policy Officer, SPD G. Jorge, Strategy and Policy Assistant, SPD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 CONTENTS Page I. BACKGROUND AND INTRODUCTION 1 II. MACROECONOMIC AND FISCAL POLICY UPDATES 1 A. Growth Performance of Asia and the Pacific 1 B. Updates on Economies Borrowing from Countercyclical Support Facility 2 III. LESSONS LEARNED 6 APPENDIXES 1. Bangladesh: Country Economic Indicators 8 2. Indonesia: Country Economic Indicators 9 3. Kazakhstan: Country Economic Indicators Philippines: Country Economic Indicators Viet Nam: Country Economic Indicators 12

4 I. BACKGROUND AND INTRODUCTION 1. To respond to the global economic downturn that followed the 2007 subprime financial crisis in the United States (US), the Board of Directors of the Asian Development Bank (ADB) approved the establishment of the $3 billion Countercyclical Support Facility (CSF) on 16 June The CSF was used during to provide budget support loans of up to $500 million for countercyclical fiscal stimulus packages by governments of countries eligible to borrow from ADB s ordinary capital resources. Abbreviated business processes were adopted to enable ADB to respond promptly to the crisis. In 2009, the Board approved five CSF loans each for the equivalent of $500 million to Bangladesh, Indonesia, Kazakhstan, the Philippines, and Viet Nam. 2 Thus, ADB committed and fully disbursed a total of $2.5 billion. As Asian economies recovered, the CSF expired on 31 December The paper establishing the CSF stipulated that the macroeconomic and fiscal condition of CSF borrowers, including their countercyclical development expenditure or policy programs, would be monitored during the life of the facility and reported to the Board annually. To this end, this report provides macroeconomic and fiscal policy updates on the CSF borrowers for Further details are provided to the Board in separate reports on individual loans prepared by the regional department concerned. 4 This report concludes with observations based on CSF implementation. II. MACROECONOMIC AND FISCAL POLICY UPDATES A. Growth Performance of Asia and the Pacific 3. Developing Asia was on track for a V-shaped recovery in 2010 (Table). The policies that were put in place at the onset of the recent global turmoil set the stage for strong performance in Slow inflation from weak global demand allowed policy makers to respond aggressively with fiscal and monetary stimuli. Consequently, all subregions of developing Asia performed well 1 ADB Enhancing ADB's Response to the Global Economic Crisis Establishing the Countercyclical Support Facility. Manila. CSF loans had interest rates set 200 basis points over the London interbank offered rate, rebates or surcharges reflecting the cost of funds, a 5-year maturity including a 3-year grace period, and a commitment charge of 75 basis points per year on the undisbursed loan balance. 2 ADB Report and Recommendation of the President to the Board of Directors: Proposed Program Loans to the People's Republic of Bangladesh for the Public Expenditure Support Facility Program and the Countercyclical Support Facility Support Program. Manila. ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to Indonesia for the Countercyclical Support. Manila. ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to Kazakhstan for the Kazakhstan Countercyclical Support Loan. Manila. ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Republic of the Philippines for Countercyclical Support. Manila. ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Socialist Republic of Viet Nam for Countercyclical Support. Manila. 3 Section II of this report draws primarily on recent research work by ADB, including the following: ADB Asian Development Outlook 2011: South South Economic Links. Manila; ADB Assessment of ADB s Response to the Global Economic Crisis, Manila; and S. Brunschwig et al The Global Financial Crisis: Impacts on Asia and Emerging Consensus. South Asia Working Paper Series. No. 3. Manila: ADB. While macroeconomic and fiscal policy updates mainly cover the status as of 2010, since the CSF was established to respond to a crisis, descriptions of loan implementation also include achievements in the middle of the global economic crisis in ADB Completion Report: Countercyclical Support Loan to Kazakhstan. Manila.

5 2 in On the demand side, aggregate demand has caught up with, if not exceeded, its potential output level by the start of The output gap (difference between actual GDP and potential GDP) 5 has been increasingly positive in many countries. This suggests that countries have fully recovered from the crisis and are back to previous modes of operation with all their challenges, including labor market tightness (which could push wages higher) and domestic inflation pressures. Gross Domestic Product Annual Growth Rates (%) Region Central Asia East Asia South Asia Southeast Asia The Pacific Developing Asia Source: ADB Asian Development Outlook 2011: South South Economic Links. Manila. 4. Consumer prices rose 4.4% in 2010, up from 1.2% in 2009 faster than in the major industrial countries. The acceleration was driven by a combination of external factors (global oil and food price shocks) and the robust domestic recovery. Developing Asia s overall current account surplus fell from 4.7% of gross domestic product (GDP) in 2009 to 4.1% in 2010, and is projected to decline further. However, it would be premature to interpret this movement as an end to the global current account imbalances that persisted before the crisis. Lasting rebalancing will require key structural changes in countries in the region with current account surpluses and the US. B. Updates on Economies Borrowing from Countercyclical Support Facility 1. Bangladesh 5. Recent growth performance. GDP grew 6.1% in FY2010, compared with 5.7% in FY Helped by favorable weather and continued government support, the crop and horticulture subsector drove the agricultural expansion. This offset a static industrial growth caused by deceleration of external demand and continued shortages of power, gas, and transport facilities. Services grew by 6.5%. On the demand side, private consumption drove growth, aided by larger credit flows to the private sector (supporting job creation) and an increase in public sector wages. Total fixed investment remained stagnant over the past half of a decade. The annual average inflation rate rose to 7.3% in FY2010 from 6.7% in FY2009 because of a rapid increase in food prices early in the year; nonfood inflation moderated. Updated country economic indicators for Bangladesh are in Appendix Public finance and fiscal policy. Revenue collection climbed briskly, raising the revenue-to-gdp ratio to 10.9% in FY2010 meeting the budget target as domestic economic activity picked up slightly and tax administration improved. Total spending rose from 14.3% of 5 The relative difference between (X12 seasonally adjusted) actual output and its Hodrick-Prescott filtered trend. 6 The fiscal year of the Government of Bangladesh ends on 30 June.

6 3 GDP in FY2009 to 14.6% in FY2010 as the government adopted an expansionary fiscal stance to offset the impact of the global recession. Budget execution suffered from the lingering weak capacity in key implementing agencies. At 4.5% of GDP, the fiscal deficit declined from 3.9% of GDP in FY2009 to 3.7 % of GDP in FY2010, well below the target of 5.0%. 7. Countercyclical Support Facility loan implementation. The CSF loan 7 supported social safety net programs in Bangladesh. It helped the government implement its countercyclical development program, which involved vastly higher spending to expand social safety net programs, a new public private partnership scheme, and a much larger allocation for infrastructure projects under the Annual Development Program. The expanded social safety net programs provided (i) immediate income and food support to poor and vulnerable people affected by the global crisis, and (ii) strong stimulus for growth. Combined with the parallel provision of program lending from the Public Expenditure Support Facility, which aimed to improve fiscal management, the CSF loan freed up government resources to finance other components of the countercyclical development program, particularly the planned scaling up of infrastructure investment. 2. Indonesia 8. Recent growth performance. Economic growth accelerated in 2010, driven by strong private consumption, buoyant investment, and a robust recovery in export demand. GDP grew 6.1%, recovering from a slowdown during the global recession in Private consumption, supported by a stronger labor market and rising prices for agricultural commodities, increased 4.6% and contributed 2.7 percentage points of GDP growth. Fixed capital investment rose 8.5% and contributed 2.0 percentage points to GDP growth. Investment in machinery and equipment, which had contracted in 2009, grew 17.1%. Investment in buildings, including infrastructure, increased 7.0% in Improvements in the domestic and global investment climate, an appreciation of the rupiah, and credit growth underpinned the increase in investment. The ratio of gross fixed capital formation to GDP rose to 32.2%. Net exports also contributed to GDP growth. The authorities brought fiscal stimulus to an end and lagged in disbursement of capital spending. Food supply disruptions caused by the bad weather and infrastructure weaknesses drove up inflation from 2.8% in late 2009 to 7.0% in December Country economic indicators for Indonesia are in Appendix Public finance and fiscal policy. Lower-than-budgeted spending, an increase in the tax-to-gdp ratio, and higher revenue because of the rise in commodity prices reduced the budget deficit to 0.6% of GDP in 2010 well below the government s projection of 2.1%. Central government revenue rose 19.5% from the previous year. Government spending was 6.5% below projection, mainly because capital expenditure fell 20.6% short of the budget. Total spending on subsidies reached Rp214.1 trillion (3.4% of GDP), 6.4% more than projected, because of higher electricity subsidies and the expansion of a program that provides rice to the poor. Central government debt fell to about 26% of GDP, less than half its proportion in The views expressed herein are those of the consultant and do not necessarily represent those of ADB s The CSF loan of $500 million was approved on 13 October 2009, 4 months after the government approved an members, Board of Directors, Management, or staff, and may be preliminary in nature. expansionary budget in June Following the harvest season, deflation was recorded in March and April, slowing down year-on-year inflation to 5.98% in May 2011.

7 4 10. Countercyclical Support Facility loan implementation. The CSF loan 9 for Indonesia enhanced budget predictability, which was essential for the government s countercyclical action. The government requested the CSF loan because it wanted to ensure predictable budget financing, given the need for temporary fiscal stimulus in 2009 and The objective of the loan was to fill part of these budget shortfalls. By doing so, it supported fiscal stimulus through (i) infrastructure investments aimed at improving the welfare of targeted groups in the social sector, (ii) competitiveness-enhancing projects in the agriculture and traditional distribution sectors, and (iii) other investments with a clear development impact. It also supported the expansion of social assistance programs in 2009 and maintenance of spending in Kazakhstan 11. Recent growth performance. GDP grew 7.0% in 2010 as the recovery that started in the fourth quarter of 2009 continued. Improved global economic conditions, a revival in external demand for oil and minerals, and higher oil prices contributed to the expansion, as did anti-crisis measures put in place in Bank restructuring was also a positive factor, although private credit remained weak. On the demand side, private consumption grew 7.5% and gross fixed investment increased 7.0% in 2010 after stagnating in Credit conditions remained tight, which may have held back further increases in private consumption and investment. After slumping in 2009, export volume grew 9.5% in 2010 as the demand for oil and other key exports rose. With consumption and investment rising, imports grew 6.5% in The annual inflation rate reached 7.1% in 2010, within the target band of 6% 8% established by the National Bank of Kazakhstan. Country economic indicators for Kazakhstan are in Appendix Public finance and fiscal policy. More economic activity, higher oil prices, and the reintroduction in mid-august 2010 of an oil export duty of $20 per ton increased budget revenue. 11 Transfers from the oil fund the National Fund of the Republic of Kazakhstan were also used to support the budget. As a result, current revenue climbed 28%. Total expenditure increased 21%: 19% on current items because of higher social spending and wages and 55% on capital items because of investments in priority projects. The fiscal deficit narrowed to 2.5% of GDP in 2010 from 2.9% a year earlier. Most of the deficit was financed through domestic sources, although foreign financing also increased. 13. Countercyclical Support Facility loan implementation. The CSF loan 12 supported implementation of the employment generation program and the anti-crisis plan, both of which supported key sectors and created jobs. The CSF package was designed to contribute financing for the employment generation program and leverage the government's commitment to pursue the anti-crisis plan. Counterpart funds generated from the loan proceeds were combined with government funds to support and reimburse the government s budgetary spending for the employment generation program. 13 The CSF support for the fiscal stimulus through these 9 The CSF loan of $500 million was approved on 7 October 2009, 8 months after the government rolled out its stimulus package in February The 2011 budget was approved by the Parliament in late October 2010 with a deficit of RP 125 trillion (1.8% of GDP). In the first quarter of 2011, the government recorded a budget surplus of RP 5.7 trillion, despite rising expenditure for fuel subsidies. 10 The government had estimated a budget deficit of 2.4% in the revised budget for 2009 with a net financing requirement of Rp129.8 trillion, and a proposed budget deficit of 2.1% in the revised budget for 2010 with a net financing requirement of Rp133.7 trillion. 11 Since January 2011, the export duty on oil increased to $40 per ton. 12 The CSF loan of $500 million was approved on 10 September 2009, 10 months after the government approved an anti-crisis plan in November The aggregate utilization rate for the employment generation program as of 31 December 2009 was 98.25%.

8 5 programs helped Kazakhstan mitigate the impact of the global economic crisis. The program was completed, as reported in its completion report circulated to the Board in December Philippines 14. Recent growth performance. A strong recovery in 2010 lifted GDP growth to 7.3% as private consumption accelerated and exports and investment rebounded from a slump in Nearly 60% of total growth came from private consumption, which rose 5.3%. Remittances from overseas workers continued to support consumption, growing 8.2% to $18.8 billion. 15 Investment accounted for about 40% of total growth, the highest proportion in 10 years. Fixed capital outlays climbed 17.1%, with equipment investment surging 25.7%. Investment in a broad range of equipment including that for agriculture, construction, mining, metalworking, transport, and telecommunications grew by at least 10%. Fixed investment rose to 15.7% of GDP, the highest rate in 6 years. A recovery in exports and robust consumption underpinned this strong investment, with support from higher corporate earnings and low interest rates. The economic rebound did not spark inflation: consumer prices rose by an average of 3.8%, within the 3.5% 5.5% target range set by Bangko Sentral ng Pilipinas, the central bank. Country economic indicators for the Philippines are in Appendix Public finance and fiscal policy. Government expenditure rose in the first half of 2010 before the new administration reined in spending in the second half to curb the fiscal deficit. Sovereign bond sales eased concerns about financing the fiscal deficit. The government sold its first peso-denominated global bonds in September That was followed by another large issue (equivalent to $1.25 billion of 25-year bonds priced to yield 6.25%) in January These issues, sold at a time of low global interest rates, helped to reduce the government s foreign exchange risk and lengthen its debt profile. The government raised an additional $1.5 billion from the sale of 15-year US dollar global bonds in March These issues were heavily oversubscribed. 16. Countercyclical Support Facility loan implementation. The CSF loan 16 helped protect social spending and expand social assistance programs, primarily for the conditional cash transfer program, public employment programs, and education and health expenditures. Comprehensive livelihood and emergency employment programs designed at the end of 2008 targeted redundant workers in the export sector, returning overseas workers, unemployed youth, and poor families. Conditional cash transfers provided income to help poor families cover the costs of pre- and postnatal care, schooling, and immunization. Quick-disbursing infrastructure investment in the social and agriculture sectors included construction and repair of schools, libraries, and health facilities, as well as the farm-to-market road program. However, tax breaks and subsidized rice programs were not well targeted, undermining their effectiveness. 5. Viet Nam 17. Recent growth performance. GDP growth accelerated to 6.8% in 2010, supported by the recovery in the global economy, the residual impact of domestic fiscal stimulus in 2009, and an expansionary monetary policy. Strong consumption growth (9.7%) stimulated private sector 14 The views expressed herein are those of the consultant and do not necessarily represent those of ADB s ADB Completion Report: Countercyclical Support Loan to Kazakhstan. Manila. 15 members, Board of Directors, Management, or staff, and may be preliminary in nature. The increase in Philippine peso terms was 2.4%. 16 The CSF loan of $500 million was approved on 24 August 2009, 7 months after the government approved a stimulus package in January 2009.

9 6 investment. Inflation accelerated to 11.8% in December 2010 and averaged 9.2% for the year, the highest rate in Southeast Asia. Popular concerns about the loss of purchasing power and the depreciation of the local currency the dong boosted purchases of gold and US dollars. Foreign currency deposits climbed 21% in The dong steadily weakened from about midyear, as reflected in the spread between the black market rate and the reference rate of the State Bank of Viet Nam, the central bank. 17 During November 2009 February 2011, the authorities devalued the dong in four steps by a total of about 20% against the US dollar. Country economic indicators for Viet Nam are in Appendix Public finance and fiscal policy. Most fiscal stimulus measures adopted during the global recession expired at the end of As a result, the fiscal deficit narrowed to 8.0% of GDP in In real terms, government expenditure was estimated to be little changed from 2009, but revenue and grants rose by about 10%, reflecting stronger non-oil tax receipts. Total public debt and publicly guaranteed debt, excluding state firms contingent liabilities, are estimated to have declined by 1 percentage point to 51.5% of GDP in 2010, still above the government s target ceiling of 50%. Weakness in the stock market over the past 2 years the VN-Index of share prices fell by 2.0% in 2010 has hindered government plans to sell shares in state-owned enterprises. 19. Countercyclical Support Facility loan implementation. The CSF loan 18 allowed the government to expand social welfare spending and poverty alleviation programs. Additional spending on infrastructure in 2009 accounted for 62% of the fiscal stimulus. This was achieved by carrying over savings from the infrastructure program in the 2008 budget and advancing infrastructure projects in the pipeline. Many of these projects are fast-disbursing and laborintensive projects targeting transport, rural irrigation, and poverty reduction in the poorest districts. Their effectiveness as countercyclical support still needs to be assessed in the upcoming program completion report. Tax cuts and deferred payments were extended to support small and medium-sized enterprises and textile and footwear firms, as well as to bolster consumption. Interest rate subsidies and credit guarantees were used to encourage lending, protect jobs, and assist poor and vulnerable groups. III. LESSONS LEARNED 20. The establishment of the CSF helped ADB respond to the global economic crisis in an unprecedented manner. The facility was a clear conceptual departure from the traditional balance-of-payments support aimed at bailing out economies with unsustainable current account deficits (as embodied in the special program lending ADB introduced in 1999). Instead, the CSF was designed to provide a new form of budget support for fiscal stimulus to counter business cycle downturns. It was particularly relevant for sustaining growth in Asia, where an increasing number of countries have recoded current account surpluses (or relatively low deficit) and maintained healthy fiscal positions, but still suffered from the loss of external demand because of the collapse of global trade. 21. CSF loans totaling $2.5 billion accounted for 23.6% of the sovereign loans ADB approved in These incremental resources helped five borrowing economies maintain enough fiscal space to sustain the stimulus policy in the recovery phase of the crisis, mostly in 17 The spread increased to more than 10% in January The State Bank of Viet Nam devalued the dong by 9.3% in February 2011, and narrowed the trading band for the dollar dong exchange rate from ±3% to ±1%. 18 The CSF loan of $500 million was approved on 15 September 2009, 4 months after the government approved an expansionary budget in June 2009.

10 7 late However, until the CSF was established in June 2009, ADB was not fully ready to cope with the worst of the crisis in the first quarter of Trying to create a new facility after the outbreak of the crisis resulted in time lags, which made it difficult for ADB to act swiftly during the worst of the crisis. If ADB had permanent crisis instruments available, it would have better prepared to help mitigate the worst of the crisis immediately upon a borrower s request. Therefore, continual efforts are needed to refine ADB s lending tool kit even in non-crisis periods. The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

11 8 Appendix 1 BANGLADESH: COUNTRY ECONOMIC INDICATORS Years Item A. Real Economy and Growth Growth rate of GDP (% per year) Growth rate of per capita GDP (% per year) Growth rate of value added in agriculture (% per year) Growth rate of value added in industry (% per year) Growth rate of value added in services (% per year) Unemployment rate (%) Gross domestic investment (% of GDP) B. Money and Inflation Inflation (% per year) Change in money supply (% per year) C. Public Finance Central government expenditures (% of GDP) Central government revenues (% of GDP) Fiscal balance of central government (% of GDP) (3.2) (3.2) (4.7) (3.9) (3.7) D. External Sector and Balance of Payments Growth rate of merchandise exports (% per year) Growth rate of merchandise imports (% per year) Trade balance ($ million) (2,889) (3,458) (5,330) (4,710) (5,152) Current account balance ($ million) ,416 3,734 Current account balance (% of GDP) Foreign direct investment ($ million) External debt outstanding ($ million) 18,603 19,355 20,266 20,859 20,336 Debt service ratio (% of exports of goods and services) Exchange rates to the US dollar (annual average) Gross international reserves ($ million) 3,484 5,077 6,149 7,471 10,750 = not available, ( ) = negative, GDP = gross domestic product, US = United States. Source: ADB Asian Development Outlook 2011: South South Economic Links. Manila. The data for 2010 has been updated.

12 Appendix 2 9 INDONESIA: COUNTRY ECONOMIC INDICATORS Years Item A. Real Economy and Growth Growth rate of GDP (% per year) Growth rate of per capita GDP (% per year) Growth rate of value added in agriculture (% per year) Growth rate of value added in industry (% per year) Growth rate of value added in services (% per year) Unemployment rate (%) Gross domestic investment (% of GDP) B. Money and Inflation Inflation (% per year) Change in money supply (% per year) C. Public Finance Central government expenditures (% of GDP) Central government revenues (% of GDP) Fiscal balance of central government (% of GDP) (0.9) (1.3) (0.1) (1.6) (0.6) D. External Sector and Balance of Payments Growth rate of merchandise exports (% per year) Growth rate of merchandise imports (% per year) Trade balance ($ million) 29,661 32,753 22,916 30,148 31,093 Current account balance ($ million) 10,860 10, ,192 6,294 Current account balance (% of GDP) Foreign direct investment ($ million) 4,914 6,929 9,318 4,878 12,736 External debt outstanding ($ million) 132, , , , ,050 Debt service ratio (% of exports of goods and services) Exchange rates to the US dollar (annual average) 9, , , , ,084.6 Gross international reserves ($ million) 42,586 56,920 51,639 66,105 96,207 ( ) = negative, GDP = gross domestic product, US = United States. Source: ADB Asian Development Outlook 2011: South South Economic Links. Manila. The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

13 10 Appendix 3 KAZAKHSTAN: COUNTRY ECONOMIC INDICATORS Years Item A. Real Economy and Growth Growth rate of GDP (% per year) Growth rate of per capita GDP (% per year) (0.1) 5.3 Growth rate of value added in agriculture (% per year) (6.1) 13.8 (11.7) Growth rate of value added in industry (% per year) (0.3) 9.6 Growth rate of value added in services (% per year) (0.2) 6.0 Unemployment rate (%) Gross domestic investment (% of GDP) B. Money and Inflation Inflation (% per year) Change in money supply (% per year) C. Public Finance Central government expenditures (% of GDP) Central government revenues (% of GDP) Fiscal balance of central government (% of GDP) 0.8 (1.7) (2.1) (2.9) (2.5) D. External Sector and Balance of Payments Growth rate of merchandise exports (% per year) (39.0) 38.5 Growth rate of merchandise imports (% per year) (24.7) 10.3 Trade balance ($ million) 14,642 15,091 33,519 14,969 28,881 Current account balance ($ million) (1,999) (8,322) 6,326 (4,359) 4,319 Current account balance (% of GDP) (2.5) (7.9) 4.7 (3.8) 3.0 Foreign direct investment ($ million) 6,663 7,966 13,118 10,653 2,155 External debt outstanding ($ million) 74,014 96, , , ,243 Debt service ratio (% of exports of goods and services) Exchange rates to the US dollar (annual average) Gross international reserves ($ million) 19,127 17,629 19,872 23,091 28,291 ( ) = negative, GDP = gross domestic product, US = United States. Source: ADB Asian Development Outlook 2011: South South Economic Links. Manila.

14 Appendix 4 11 PHILIPPINES: COUNTRY ECONOMIC INDICATORS Years Item A. Real Economy and Growth Growth rate of GDP (% per year) Growth rate of per capita GDP (% per year) (0.9) 5.3 Growth rate of value added in agriculture (% per year) (0.5) Growth rate of value added in industry (% per year) (0.9) 12.1 Growth rate of value added in services (% per year) Unemployment rate (%) Gross domestic investment (% of GDP) B. Money and Inflation Inflation (% per year) Change in money supply (% per year) C. Public Finance Central government expenditures (% of GDP) Central government revenues (% of GDP) Fiscal balance of central government (% of GDP) (1.1) (0.2) (0.9) (3.9) (3.7) D. External Sector and Balance of Payments Growth rate of merchandise exports (% per year) (2.5) (22.1) 34.8 Growth rate of merchandise imports (% per year) (24.0) 31.5 Trade balance ($ million) (6,732) (8,391) (12,855) (8,842) (10,384) Current account balance ($ million) 5,341 7,112 3,627 9,358 8,465 Current account balance (% of GDP) Foreign direct investment ($ million) 2,921 2,916 1,544 1,963 1,713 External debt outstanding ($ million) 53,897 55,470 54,328 54,856 59,771 Debt service ratio (% of exports of goods and services) Exchange rates to the US dollar (annual average) Gross international reserves ($ million) 22,967 33,751 37,551 44,243 62,373 ( ) = negative, GDP = gross domestic product, US = United States. Source: ADB Asian Development Outlook 2011: South South Economic Links. Manila. The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

15 12 Appendix 5 VIET NAM: COUNTRY ECONOMIC INDICATORS Years Item A. Real Economy and Growth Growth rate of GDP (% per year) Growth rate of per capita GDP (% per year) Growth rate of value added in agriculture (% per year) Growth rate of value added in industry (% per year) Growth rate of value added in services (% per year) Unemployment rate (%) Gross domestic investment (% of GDP) B. Money and Inflation Inflation (% per year) Change in money supply (% per year) C. Public Finance Central government expenditures (% of GDP) Central government revenues (% of GDP) Fiscal balance of central government (% of GDP) (1.2) (4.6) (3.1) (10.6) (8.0) D. External Sector and Balance of Payments Growth rate of merchandise exports (% per year) (8.9) 26.4 Growth rate of merchandise imports (% per year) (13.3) 21.2 Trade balance ($ million) (2,776) (10,438) (12,782) (8,306) (7,097) Current account balance ($ million) (164) (7,092) (10,787) (6,020) (4,253) Current account balance (% of GDP) (0.3) (10.0) (11.8) (6.2) (4.0) Foreign direct investment ($ million) 2,315 6,516 9,279 6,900 External debt outstanding ($ million) 15,641 19,253 21,816 27,929 Debt service ratio (% of exports of goods and services) Exchange rates to the US dollar (annual average) 15, , , , ,589.0 Gross international reserves ($ million) 11,483 20,964 23,022 14,148 12,382 = not available, ( ) = negative, GDP = gross domestic product, US = United States. Source: ADB Asian Development Outlook 2011: South South Economic Links. Manila.