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The US financial crisis and its impacts on import-export activities in Vietnam - 1


FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL BUSINESS AND ECONOMICS

MASTER OF FOREIGN ECONOMICS


GRADUATION THESIS

TOPIC:

US FINANCIAL CRISIS AND ITS IMPACT ON IMPORT-EXPORT ACTIVITIES IN VIETNAM


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Instructor

Student name Class

: In Hai Phong

: English 7

: 44B

: Dr. Huong Lan

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The US financial crisis and its impacts on import-export activities in Vietnam - 1


Hanoi, May 2009

INDEX

LIST OF ABBREVIATIONS i

LIST OF TABLES ii

INTRODUCTION 1

CHAPTER I. OVERVIEW OF THE US FINANCIAL CRISIS 4

I. POSITION AND ROLE OF THE US IN THE WORLD ECONOMY 4

1. America's position in the world economy 4

2. The role of the US in the world economy 6

II. SOME BASIC ISSUES ABOUT THE FINANCIAL CRISIS, CAUSES AND DEVELOPMENT OF THE US FINANCIAL CRISIS 7

1. Some basic issues about the financial crisis 7

1.1. Concept of financial crisis 7

1.2. Signs of financial crisis 8

2. Causes of the US financial crisis 9

3. Developments of the US financial crisis 17

III. IMPACT OF THE US FINANCIAL CRISIS ON THE ECONOMY

WORLD 18

1. Consequences of the financial crisis on the US economy 18

2. Consequences of the US financial crisis on the world economy 21

CHAPTER II. IMPACT OF THE US FINANCIAL CRISIS ON VIETNAM'S IMPORT-EXPORT ACTIVITIES 27

I. IMPACT OF THE US FINANCIAL CRISIS ON THE VIETNAMESE ECONOMY 27

1. Impact on financial markets 28

2. Impact on the real estate market 30

3. Impact on the stock market 31

4. Impact on foreign direct investment 33

5. Impact on import and export activities 34

II. IMPACT OF THE US FINANCIAL CRISIS ON VIETNAM'S IMPORT-EXPORT ACTIVITIES 35

1. Vietnam's import and export situation before the US financial crisis 35

1.1. General overview of Vietnam's import and export activities 35

1.2. Vietnam's import and export in the period 2001 - 2007 38

2. Vietnam's import and export in the US financial crisis 43

2.1. Export situation 44

2.2. Import situation 48

3. The effects of the financial crisis on bilateral trade activities

Vietnam - US 51

4. General assessment of the impacts of the financial crisis on Vietnam's import and export activities 54

CHAPTER III. SOME SOLUTIONS TO PROMOTE IMPORT AND EXPORT ACTIVITIES IN VIETNAM IN THE CONTEXT OF THE US FINANCIAL CRISIS 63

I. FORECAST OF VIETNAM'S ECONOMY AND GOALS AND DEVELOPMENT ORIENTATION OF VIETNAM'S IMPORT-EXPORT ACTIVITIES FROM NOW TO 2010 63

1. Forecast of Vietnam's economic situation from now to 2010 63

2. Goals and orientations of Vietnam's import-export activities from now to 2010 65

II. SOME SOLUTIONS TO PROMOTE IMPORT AND EXPORT ACTIVITIES

EXPORT IN VIETNAM DURING THE 70 US FINANCIAL CRISIS

1. Some solutions from the State 71

1.1. Restructuring export markets 71

1.2. Promoting trade promotion activities 77

1.3. Continue to implement export support measures 78

1.4. Strengthening banking tools to support additional capital sources for businesses 81

1.5. Reduce imports, limit trade deficit 82

2. Some solutions for import-export businesses 83

2.1. Proactively diversify export products 83

2.2. Strengthening the distribution system to minimize the form of export through intermediaries 83

2.3. Understand and grasp market demand and capacity 85

2.4. Deploy search for new potential markets. 85

2.5. Increase investment to expand production scale, focus on innovation of technology and equipment. 85

2.6. Review signed contracts 85

CONCLUSION 87

REFERENCES 88

LIST OF ABBREVIATIONS


ADB : Asian Development Bank BTA : Vietnam - US Trade Agreement CDS : Bad Debt Guarantee Contract

CEMAC : African Economic and Monetary Community

Securities Company: Securities Company

EPA : Vietnam - Japan Comprehensive Bilateral Cooperation Agreement

FDI : Foreign Direct Investment

FED : Federal Reserve

GCC : Gulf Cooperation Council countries

GDCK : Stock Trading GDP : Gross Domestic Product IIF : International Institute of Finance ILO : International Labor Organization IMF : International Monetary Fund MBS : Derivative Securities

UAE : United Arab Emirates

USDA : United States Department of Agriculture

WB : World Bank

WTO : World Trade Organization

LIST OF TABLES


Table 1.1 : US GDP value in the period 2004 - 2008 (unit: trillion USD) Figure 1.1 : 10 largest economies in the world in 2007 (calculated by GDP/year) Figure 1.2 : OTH stock model

Figure 1.3 : OTD stock model

Figure 1.4 : US GDP growth rate in the period 2000 - 2008 (unit: %)


Figure 2.1 : Credit growth of Vietnam's banking system in the period 2000 - 2008 (unit: %)

Table 2.1 : Total import-export turnover in the period 2001 - 2007 (unit: million USD)

Figure 2.2 : Structure of Vietnam's export market in 2008 (unit: %)

Table 2.2 : List of 10 products with the highest export turnover in 2008 (unit: billion USD)

Figure 2.3 : Export turnover value in 12 months of 2008 and the first 2 months of 2009 (unit: billion USD)

Table 2.3 : Export turnover of main commodities in the first two months of 2009 (unit: million USD)

Figure 2.4 : Import turnover value in 12 months of 2008 and the first 2 months of 2009 (unit: billion USD)

Figure 2.5 : Import turnover of goods (unit: %)

Table 2.4 : Import turnover of main commodities in the first two months of 2009 (unit: million USD)

Table 2.5 : Two-way trade between Vietnam and the United States in the period 2000 - 2008 (unit: billion USD)

Figure 2.6 : Growth rate of two-way trade turnover and export turnover between Vietnam and the US (unit: %)

Table 2.6 : Growth rate of export turnover to some major markets over the years (unit: %)

Table 2.7 : FDI attraction and implementation in the period 2001 - 2008 (unit: billion USD)


Table 3.1 : Forecast of Vietnam's economic growth rate in 2009 (unit: %)

Table 3.2 : Export turnover of agricultural, forestry and fishery products in the period 2009 - 2010 (unit: million USD, %)

Appendix : List of some major financial institutions that went bankrupt or merged during the US financial crisis

INTRODUCTION


1. Urgency of the topic

Since the Great Depression of the 1930s, in 2008, the world is once again experiencing a serious financial crisis. Originating in the United States and exploding in the real estate market, the US financial crisis has been called “the most severe and simultaneous worldwide recession in modern economic history” by Charles Dallara, executive director of the Institute of International Finance (IIF) - representing more than 375 major banks and financial institutions in the world. It is not regional like the 1997 Asian financial crisis or the Latin American debt crisis of the 1980s; nor does it occur in the context of opposition between two factions, like the Cold War, in which small countries can be supported by larger countries in the same faction; the 2008 US financial crisis is a global crisis, capable of spreading from one region to another, from one sector to another. With the damage so massive that it is beyond any existing framework, no international organization or country can come to the rescue. The only thing countries can do is to save themselves and cooperate to prevent further collapse.

Up to now, the consequences of the financial crisis have not been fully quantified. Every aspect of the economy from production, consumption, trade, personal income, labor market, inflation has been negatively affected. In fact, the more dependent countries are on exports, the more deeply affected they are, due to the serious decline in global trade. Vietnam's import and export is no exception. In 2008 and the first months of 2009, our country's import and export suffered many difficulties due to negative impacts on the world market such as price increases, reduced import demand, increased protection, etc. The decline in exports will directly affect economic growth, so understanding the negative impacts of the financial crisis on import and export as well as finding solutions to limit the immediate difficulties is an important task for the Vietnamese economy in this period.

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