FINANCIAL INSTITUTION AND MARKET GROUP

VIET NAM NATIONAL UNIVERSITY- HO CHI MINH CITY

INTERNATIONAL UNIVERSITY

SCHOOL OF ECONOMICS, FINANCE, AND ACCOUNTING

CORPORATE FINANCE

LECTURER: VO THI QUY

GROUP – CLASS

No. Member’s Name Student ID

1
2
3
4
5
FINANCIAL INSTITUTION AND MARKET GROUP

I.BRIEF OVERVIEW:
Monetary policy, GDP, interest rates, and inflation are critical factors in economic analysis, providing
valuable insights into price stability, economic growth, financial stability, and overall economic health.

This report is aimed to examine the impact of these factors in 12 countries, including Germany, Malaysia,
Korea, China, Vietnam, France, the United States, Japan, Thailand, Singapore, the Philippines, and
Indonesia, with a specific focus on comparing them to the economy of Vietnam.

General Information about Viet Nam’s economy from 2000 to 2022

Viet Nam Economic Indicators In 2022

Inflation FDI Interest Unemploy Public Debt BOP Ranking(/

Rate ment Rate (bil) GDP)
(bil)

3.19% 3,219 6% 2.23% 39.7% 11.2 36th

Vietnam's economy has experienced remarkable growth and transformation over the past two decades, positioning
itself as one of the fastest-growing economies in Southeast Asia. From 2000 to 2022, the country's GDP expanded
significantly, reaching US$409 billion, a big increase compared to the year 2000. This growth is reflected in the rising
GDP per capita, which rose to US$4,110 in 2022, representing an increase of US$393 from the previous year.

Interestingly, Vietnam achieved a growth rate of 80.2 percent in 2022, surpassing the initial target of 6-6.5 percent
and marking the highest growth rate since 2011. This performance was widespread across the country, with 99 out
of 63 cities and provinces reporting GDP growth of at least 6.5 percent. Regions such as Khanh Hoa, Bac Giang, and
Da Nang experienced remarkable growth rates, demonstrating the diverse economic expansion occurring
throughout the nation.

The positive trend of Vietnam's economy is recognized internationally, with the International Monetary Fund
projecting that Vietnam's GDP will surpass the economies of the Philippines and Singapore, making it the third largest
economy in Southeast Asia by 2025.

II. DATA ANALYSIS AND KEY QUESTION:

How does Vietnam's monetary policy, including its
interest rate decisions, compare those countries?
In this section of the report, we are about
to dip into the key questions surrounding
the relationship between monetary What is the relationship between inflation rates and
policy, interest rates, inflation, and GDP interest rate adjustments in Vietnam, and how does it
growth in Vietnam compared to other differ from other countries?
countries such as Germany, Malaysia,
Korea, China, France, the US, Japan,
How does Vietnam's GDP growth performance stand
Thailand, Singapore, the Philippines, and
against other countries?
Indonesia.
FINANCIAL INSTITUTION AND MARKET GROUP

How does Vietnam's monetary policy, including its interest rate decisions, compare those
countries?

Viet Nam With Thailand, Singapore, Philippines, Malaysia, and Indonesia

When comparing Vietnam's monetary policy to that of other countries in the ASEAN-5 region, namely Thailand,
Singapore, the Philippines, Malaysia, and Indonesia, 2 notable differences.

Volatility Stability

Vietnam's monetary policy, particularly in terms of
interest rate decisions, has historically exhibited
greater volatility compared to the other ASEAN-5
countries. The provided data from 2000 to 2022
indicates significant fluctuations in Vietnam's interest
rates over time.
The other countries have maintained a more consistent
and gradual approach to interest rate adjustments
during the same period. Their interest rates tended to
be lower than Vietnam's in the early years and have
remained relatively stable and predictable, with
smaller fluctuations over time.

Aggressive Approach Gradual Approach

Vietnam's monetary policy tended to be more
aggressive, with higher interest rates compared to
other ASEAN-5 countries. This suggests a relatively
more proactive stance towards managing inflationary
pressures and supporting economic growth.
The other countries have generally adopted a more
gradual and cautious approach to interest rate
adjustments, prioritizing stability, and long-term
planning. They have favored moderate and incremental
changes to interest rates, aiming to maintain a
predictable and conducive monetary environment for
businesses and individuals.
FINANCIAL INSTITUTION AND MARKET GROUP

Viet Nam With China, Korea, and Japan

• China: The interest rates in China remained relatively stable and at lower levels compared to the other
countries. From 2000 to 2022, China maintained consistently low interest rates, ranging from around 3.0%
to 3.6%. This suggests a monetary policy focused on stimulating economic growth and supporting
investment.
• Japan: Japan implemented a prolonged period of low interest rates during the analyzed period. Interest
rates in Japan were consistently low, ranging from around 0.39% to 2.43%. This long-lasting low-interest-
rate policy was aimed at combating deflation and encouraging borrowing and spending to boost the
economy.
• Korea: Korea's interest rates fluctuated within a relatively narrow range throughout the years. The rates
started around 2.02% in 2000 and ended around 1.35% in 2022. Korea's monetary policy demonstrated a
balance between promoting economic growth and maintaining stability, with occasional adjustments to
respond to changing economic conditions.

Viet Nam • Higher and more volatile interest rates.

• Reflects a proactive approach to managing inflation and supporting economic
growth.

China • Consistently low and stable interest rates.

• Aimed at stimulating economic growth and facilitating investment

Japan • Implemented to combat deflation and encourage borrowing and spending.

• Interest rates remained historically low, ranging from around 0.39% to 2.43%

Korea • Moderate fluctuations within a relatively narrow range.

• Pursues a balanced approach to monetary policy.
FINANCIAL INSTITUTION AND MARKET GROUP

Viet Nam With US, Canada, Germany, and France

• United States: implemented a varied monetary policy during this period. Following the dot-com bubble
burst and the global financial crisis, the Federal Reserve (Fed) took measures to stimulate economic growth
and stabilize the financial system. From 2000 to 2006, the Fed gradually reduced interest rates, reaching
historic lows in response to the financial crisis. However, as the economy recovered, the Fed started on a
series of interest rate hikes to normalize monetary policy and manage inflationary pressures. This tightening
cycle lasted until 2019, when the Fed shifted to a more accommodative stance in response to economic
uncertainties, including the COVID-19 pandemic.
• Canada: monetary policy closely followed that of the United States due to its strong economic ties. The
Bank of Canada adjusted interest rates in response to changes in the U.S. Federal Reserve rates. Similar to
the United States, Canada experienced a period of declining interest rates until the mid-2000s, followed by
a gradual increase to curb inflationary pressures.
• France: as a member of the Eurozone, follows the monetary policy decisions set by the European Central
Bank (ECB). The ECB aims to maintain price stability across the region. From 2000 to 2008, interest rates in
France gradually declined as the Eurozone faced economic challenges and the global financial crisis.
Following the crisis, the ECB lowered interest rates further in an effort to stimulate economic growth and
combat deflationary pressures. However, the Eurozone debt crisis led to a period of higher borrowing costs
and increased financial volatility. In response, the ECB implemented unconventional measures, including
quantitative easing and negative interest rates, to support the economy.
• Germany: a member of the Eurozone, follows the monetary policy decisions set by the ECB. Similar to
France, Germany experienced declining interest rates from 2000 to 2008. However, due to its strong
economy and fiscal discipline, Germany was regarded as a relatively stable and resilient country during the
Eurozone debt crisis. As the Eurozone faced challenges, Germany benefited from lower borrowing costs
and maintained a favorable interest rate environment. The country's solid economic performance and
commitment to sound fiscal policies contributed to its stability.
FINANCIAL INSTITUTION AND MARKET GROUP

What is the relationship between inflation rates and interest rate adjustments in Vietnam, and
how does it differ from other countries?
The Fisher Effect has implications for economies on a macroeconomic scale. In countries where the Fisher Effect
holds true, an increase in inflation rates would lead to higher nominal interest rates. This relationship is based on
the idea that lenders and borrowers adjust their expectations and require compensation for the anticipated erosion
of purchasing power caused by inflation. In countries where the Fisher Effect holds true, an increase in inflation rates
would lead to higher nominal interest rates. This relationship is based on the idea that lenders and borrowers adjust
their expectations and require compensation for the anticipated erosion of purchasing power caused by inflation.

Fisher Effect
real interest rate ≈ nominal interest rate − inflation rate

The correlation between inflation rates and interest rate adjustments in Vietnam

In Vietnam, there is generally a positive correlation
between inflation rates and interest rate
adjustments. As inflation rises, the central bank
tends to increase interest rates as a measure to
control inflationary pressures and stabilize the
economy. Conversely, when inflation is low, the
central bank may lower interest rates to stimulate
economic activity and encourage borrowing and
investment.
The relationship between inflation and interest rates in
Vietnam is driven by the monetary policy objectives of
the State Bank of Vietnam (SBV), the country's central
bank. The SBV aims to maintain price stability and
ensure sustainable economic growth. When
inflationary pressures increase, such as through rising
commodity prices or excess demand, the SBV may
tighten monetary policy by raising interest rates.

The correlation between inflation rates and interest rate in ASEAN-5

Thailand Singapore Philippines Malaysia Indonesia

Correlation Positive Positive Positive Positive Positive

Purpose of Manage inflation Manage inflation Manage inflation Manage inflation Responseto
adjusting IR and promote and promote and promote and support price inflationary
price stability economic stability economic stability stability pressures

Among these countries, Vietnam consistently

had relatively higher inflation rates, reaching
a peak of 23.12% in 2008. This was followed
by Indonesia, which also experienced
significant fluctuations in inflation, peaking at
13.11% in 2006. On the other hand,
Singapore consistently had the lowest
inflation rates among the ASEAN-5 countries,
with an average inflation rate of around 1.5%
during this period. Malaysia also maintained
relatively low inflation rates, with the lowest
point of -1.14% in 2020.
FINANCIAL INSTITUTION AND MARKET GROUP

The correlation between inflation rates and interest rate in China, Korea, and Japan
China Korea Japan

Correlation Positive Positive -

Purpose of adjusting IR Maintain price stability while Balance inflation and Stimulate inflation and
promoting sustainable economic growth achieve a moderate level of
economic growth price growth

China and Korea had relatively moderate

inflation rates, with China experiencing
fluctuations between negative and positive
rates throughout the period. Korea maintained
inflation rates ranging from around 0.35% to
5.93%, with some volatility during the global
financial crisis in 2008. Japan, on the other
hand, faced a persistent challenge of low
inflation or deflation. Its inflation rates
remained generally low, with negative rates
observed in some years.

The correlation between inflation rates and interest rate in US, Canada, Germany and France
US Canada Germany France

Correlation Positive Positive - -

Purpose of adjusting Controlling inflation Balancing inflation Ensuring price stability Managing inflation
IR and economy and economic growth and economic activity

The United States experienced medium

inflation, with fluctuations ranging from a low
of -0.36% in 2009 to a high of 4.70% in 2021.
Canada and Germany both maintained
relatively low inflation rates, with Canada
ranging from a low of 0.30% in 2009 to a high
of 3.40% in 2021, and Germany ranging from
a low of 0.51% in 2020 to a high of 2.76% in
2002. France consistently had the lowest
inflation rates among these countries, with an
average inflation rate of around 1.5% during
this period, with the highest point of 2.81% in
2008.
FINANCIAL INSTITUTION AND MARKET GROUP

How does Vietnam's GDP growth performance stand against other countries?
Vietnam has been experiencing robust economic growth over the years, with its GDP expanding at a significant pace.
From 2000 to 2021, Vietnam's economy has been growing consistently, with several years of high growth rates.
Notably, Vietnam's economic growth accelerated in the 2000s and 2010s, driven by factors such as market-oriented
reforms, increased foreign direct investment, and strong export performance.

In recent years, Vietnam has

emerged as one of the fastest-
growing economies in the Southeast
Asian region. In 2020, despite the
challenges posed by the COVID-19
pandemic, Vietnam recorded a
positive GDP growth rate,
demonstrating its resilience and
effective handling of the crisis.

Within the ASEAN-5 group, Vietnam's GDP growth rate consistently exceeded that of Thailand, Singapore, the
Philippines, and Indonesia. Vietnam's average annual growth rate of around 6% stands out compared to its ASEAN
counterparts. This highlights Vietnam's ability to foster economic development and become a leading economy in
the region.

In comparison to the combined growth rates of China, Korea, and Japan, Vietnam demonstrated a higher average
GDP growth rate. While these countries are economic powerhouses, Vietnam's economy experienced more rapid
expansion, positioning it as a key player in Asia.
FINANCIAL INSTITUTION AND MARKET GROUP

Similarly, when compared to the combined growth rates of the US and Canada, Vietnam's GDP growth rate surpassed
the average growth rate of these developed economies. This indicates Vietnam's ability to attract investments and
stimulate economic growth.
VN Thai Sing Malay Philip Indo China Kor Jpan US Can Ger Fran
2000 6.79% 4.46% 9.04% 8.86% 4.38% 4.92% 8.49% 9.06% 2.76% 4.08% 5.18% 2.91% 3.92%
2001 6.19% 3.44% -1.07% 0.52% 3.05% 3.64% 8.34% 4.85% 0.39% 0.95% 1.79% 1.68% 1.98%
2002 6.32% 6.15% 3.92% 5.39% 3.72% 4.50% 9.13% 7.73% 0.04% 1.70% 3.02% -0.20% 1.14%
2003 6.90% 7.19% 4.55% 5.79% 5.09% 4.78% 10.04% 3.15% 1.54% 2.80% 1.80% -0.70% 0.82%
2004 7.54% 6.29% 9.94% 6.78% 6.57% 5.03% 10.11% 5.20% 2.19% 3.85% 3.09% 1.18% 2.83%
2005 7.55% 4.19% 7.37% 5.33% 4.94% 5.69% 11.39% 4.31% 1.80% 3.48% 3.20% 0.73% 1.66%
2006 6.98% 4.97% 9.01% 5.58% 5.32% 5.50% 12.72% 5.26% 1.37% 2.78% 2.63% 3.82% 2.45%
2007 7.13% 5.44% 9.02% 6.30% 6.52% 6.35% 14.23% 5.80% 1.48% 2.01% 2.07% 2.98% 2.42%
2008 5.66% 1.73% 1.86% 4.83% 4.34% 6.01% 9.65% 3.01% -1.22% 0.12% 1.01% 0.96% 0.25%
2009 5.40% -0.69% 0.13% -1.51% 1.45% 4.63% 9.40% 0.79% -5.69% -2.60% -2.93% -5.69% -2.87%
2010 6.42% 7.51% 14.52% 7.42% 7.33% 6.22% 10.64% 6.80% 4.10% 2.71% 3.09% 4.18% 1.95%
2011 6.41% 0.84% 6.21% 5.29% 3.86% 6.17% 9.55% 3.69% 0.02% 1.55% 3.15% 3.93% 2.19%
2012 5.50% 7.24% 4.44% 5.47% 6.90% 6.03% 7.86% 2.40% 1.37% 2.28% 1.76% 0.42% 0.31%
2013 5.55% 2.69% 4.82% 4.69% 6.75% 5.56% 7.77% 3.16% 2.01% 1.84% 2.33% 0.44% 0.58%
2014 6.42% 0.98% 3.94% 6.01% 6.35% 5.01% 7.43% 3.20% 0.30% 2.29% 2.87% 2.21% 0.96%
2015 6.99% 3.13% 2.98% 5.09% 6.35% 4.88% 7.04% 2.81% 1.56% 2.71% 0.66% 1.49% 1.11%
2016 6.69% 3.44% 3.56% 4.45% 7.15% 5.03% 6.85% 2.95% 0.75% 1.67% 1.00% 2.23% 1.10%
2017 6.94% 4.18% 4.66% 5.81% 6.93% 5.07% 6.95% 3.16% 1.68% 2.24% 3.04% 2.68% 2.29%
2018 7.47% 4.22% 3.66% 4.84% 6.34% 5.17% 6.75% 2.91% 0.58% 2.95% 2.78% 0.98% 1.87%
2019 7.36% 2.15% 1.10% 4.41% 6.12% 5.02% 5.95% 2.24% -0.24% 2.29% 1.88% 1.06% 1.84%
2020 2.87% -6.20% -4.14% -5.53% -9.52% -2.07% 2.24% -0.71% -4.51% -2.77% -5.23% -3.70% -7.78%
2021 2.48% 1.53% 7.61% 3.09% 3.70% 3.69% 8.11% 4.15% 1.66% 5.95% 4.54% 2.63% 6.82%
Vietnam's remarkable economic growth can be attributed to its export-oriented policy
The export-oriented policy has been a driving force behind Vietnam's economic success, positioning the country as
an emerging global player in international trade and investment. By focusing on producing goods and services for
international markets, Vietnam has capitalized on its abundant labor force, favorable business environment, and
competitive production costs. This approach has also enabled Vietnam to attract foreign direct investment, foster
technological advancements, and improve its infrastructure.

Vietnam has engaged in significant

economic cooperation with these group
countries. With China, Vietnam has
established strong trade and investment
ties, making China one of Vietnam's largest
trading partners. In terms of Korea,
Vietnam has witnessed increasing
cooperation, particularly in areas such as
manufacturing, technology, and
infrastructure development. Japan has
been an important investor in Vietnam,
supporting its industrialization and
contributing to economic growth.
FINANCIAL INSTITUTION AND MARKET GROUP

Table: Key Trade Sectors Between Vietnam and Other Countries

Vietnam has also deepened economic ties

with the US, engaging in trade agreements
and attracting American investments.
Cooperation with Canada has focused on
sectors like education, energy, and
infrastructure. With France, Vietnam has
developed partnerships in various sectors,
including aerospace, infrastructure, and
renewable energy. Germany has been a
key trade partner and source of
technology and investment for Vietnam.

Germany Cooperation in manufacturing, technology, and renewable energy sectors

France Collaboration in aerospace, infrastructure, and renewable energy sectors

China Strong trade partnership, increased trade volumes, and investments, contributing to manufacturing
and agricultural growth.

Korea Support in investment, technology transfer, and infrastructure development

Japan Major investor supporting industrialization, growth in manufacturing, electronics, and automotive
sectors

US Trade agreements and investments have led to the expansion of industries such as manufacturing,
information technology, and services

Canada Cooperation has flourished in sectors such as agriculture, energy, and tourism

Thailand Strengthened economic ties through trade agreements and joint projects
FINANCIAL INSTITUTION AND MARKET GROUP

Singapore Crucial trade and investment partner, particularly in real estate, manufacturing, and financial
services

Indonesia Increasing collaboration in energy, infrastructure, and tourism sectors

Philippines Enhanced cooperation in agriculture, tourism, and infrastructure development

Malaysia Investment cooperation, particularly in electronics, oil and gas, and tourism

III. Conclusion: