Economy Intelligence Unit: Vietnam Has Highest Ranking out of All Economies in the World.

Vietnam's Gross Domestic Product (GDP) increased by 3.32% in comparison to the same period in 2023, as reported by the General Statistics Office of Vietnam (GSO).

Illustrative image. Source: VNA
Illustrative image. Source: VNA

The Economist Intelligence Unit (EIU), a research and analysis division of the Economist Group of the UK, has recently released its ranking of the global business environment for the second quarter of the year. To the surprise of many, Vietnam was ranked the highest among all the economies that were assessed. As reported by Vietnam’s Voice of Vietnam (VOV), Vietnam’s impressive showing is a testament to its robust economic development.

The Economist Intelligence Unit (EIU) offers numerous categories to evaluate economic management activities over the last five years and the next five-year prospects of many countries and regions, which helps to assess the quality or attractiveness of the business environment in 82 countries and economies around the world.

The nations that saw the most remarkable improvement in the EIU’s ranking over the past year include Vietnam, Thailand, Belgium, Sweden, India, and Costa Rica.

Of these, Vietnam is considered to have the greatest motivation, increasing 12 places in the ranking, while Thailand rose by 10 places and India grew by six places.

In the 2023 EIU rankings, Singapore maintained its place as the world’s premier destination for conducting business, having held that position for an impressive 15 years in a row. Moreover, the country is expected to remain the most desirable business hub for the next five years.

The Economist Intelligence Unit (EIU) awarded Singapore a perfect score in its policies related to foreign investment, foreign exchange control, and foreign trade. This demonstrates the city-state’s commitment to creating a conducive environment for businesses to thrive. Singapore’s strong performance in these areas has made it an attractive destination for foreign investors and businesses.

Singapore is widely regarded as one of the most technologically-advanced countries in the world, thanks to its innovative government policies that focus on developing cutting-edge tech infrastructure and fostering a vibrant startup ecosystem. This is evidenced by the fact that Singapore consistently ranks at the top for tech readiness.

The Singaporean Government has been a trailblazer in utilizing high-tech solutions to enhance public services.

Canada and Denmark are both tied at second place, and four other European economies join the United States, Hong Kong Special Administrative Region (China), and New Zealand in the top 10.

Four Asia-Pacific economies, including Australia, Taiwan (China), and the Republic of Korea, are featured in the top 20 of the list.

The countries that experienced the most drastic downgrade in the rankings include China, Bahrain, Chile, and Slovakia. China, in particular, experienced an 11-place fall from the previous year, resulting in the most significant decrease globally.

The Economist Intelligence Unit (EIU) has reported that, despite the Chinese government’s move to significantly ease its Covid-19 prevention measures, changes to regulations and higher costs have had a negative impact on the business climate, thereby curtailing the prospects of foreign investors.

Vietnam’s impressive 8% growth in 2022 has been a major highlight of the region and the world, according to Daniel Leigh, head of the World Economic Studies division in the International Monetary Fund’s (IMF) Research Department – the body responsible for producing the World Economic Outlook (WEO).

In an interview granted to the Vietnam News Agency during the week of the Spring Meetings of the IMF and the WB in Washington D.C., Leigh stated that the IMF had recently revised its growth forecast for Vietnam up, attributing this partly to the rebound from the Covid-19 pandemic and trade diversion. According to the expert, some of the investment is being redirected to Vietnam, providing the country with a boost.

Daniel Leigh, head of the World Economic Studies division in the International Monetary Fund (IMF)'s Research Department. Photo: Flickr
Daniel Leigh, head of the World Economic Studies division in the International Monetary Fund (IMF)’s Research Department. Photo: Flickr

Although the International Monetary Fund (IMF) anticipated a decrease in Vietnam’s growth, the projected rate remains lofty, at 5.8% in 2023 and 6.9% in 2024, he stated.

He also noted that inflation in Vietnam is relatively low, at around 3% in 2022. However, it is projected to increase – largely due to the country’s strong economic performance – and is forecast to reach the global inflation target of 4.3% in 2024.

For Vietnam to continue to grow robustly in the coming quarters and the next five years, Leigh suggested that the country’s monetary policy should remain focused on curbing inflation as it occurs, and fiscal policy should continue to provide targeted assistance to vulnerable households.

Regarding financial stability, a high priority should be given to helping stabilise the real estate and corporate bond markets with specific tools, but this should not detract from the overall move toward ensuring inflation stability, he suggested.

Over the past period, the State Bank of Vietnam (SBV) has made consistent efforts to reduce regulatory interest rates, creating an environment for credit institutions to lower their lending rates and consequently boosting economic growth, noted Dao Minh Tu, Deputy Governor of the SBV.

Experts described the central bank’s reductions as flexible and timely, and predicted that 12-month deposit interest rates will remain around 7% and lending interest rates, 10%.

The bank has ample room to relax its monetary policy even further this year, they stated, emphasizing that it will carry on reducing policy rates by 50 basis points in the second quarter of the year.

Experts from Bao Viet Securities JSC recently suggested that the most substantial pressure on interest rates in 2018 was derived from the United States Federal Reserve’s (US Fed’s) regular rate increases, which caused the US Dollar to reach its highest level in two decades.

Those from the United Overseas Bank (UOB) have also reported that Vietnam’s GDP growth has only increased by 3.32% in the first quarter of this year, a significant decrease from the 5.92% in the last quarter of 2022. This decrease has prompted the central bank to reduce regulatory interest rates and is likely to lead to further relaxed policies in the future.

Hannah Nguyen