Middle East Diplomatic Crisis Affects Vietnamese Economy: Report

Tuan Minh

11:02 20/06/2017

BizLIVE - The ongoing diplomatic crisis in the Middle East is indirectly affecting the Vietnamese economy, an oil exporter.

Middle East Diplomatic Crisis Affects Vietnamese Economy: Report

Low oil prices may dampen Vietnam's economy. Photo: Internet

The ongoing diplomatic crisis between Qatar and other Gulf states has hampered the recovery of global crude oil prices, thus indirectly affecting the Vietnamese government's plan to exploit an additional one million tons of oil to meet its growth target, a think tank has said.
One of the short-term solutions of the government to support economic growth is to tap an extra one million tons of crude oil. “This plan will be feasible if crude prices rebound,” MarketIntello has said in its latest report.
However, if oil prices stay low, such a plan will cause exploiters to incur losses, the report notes.
According to the Ministry of Planning and Investment, the cost of production ranges between $30 and $70 a barrel, while Ho Chi Minh City Securities Co. said in a report that the breakeven point is around $50 USD a barrel.
That oil prices have dropped to below the $50/barrel mark will pose a big challenge for the government’s plan, said the report.
MarketIntello researchers retained their forecast for Vietnam’s economic growth at 6.1% this year, noting that the reading could be higher given accelerated disbursement of budget-sourced investments and tailwinds for Vietnam’s exports.
The government has retained its GDP growth target at 6.7% this year despite a slowdown in the first quarter.
The country’s whole-year inflation is seen at 2.9% thanks to declines in prices of perishables and petroleum products, the think tank added.
It forecast the dong to weaken by 0.5% against the U.S. dollar this year due to domestic trade balances, a surplus of the capital balance and abundant forex reserves.