Topic analysis of gdp structure of vietnam in the last 5 years giving comment on the relationship between saving and investment during this period

With the topic: "Analyzing the structure of Vietnam's GDP in the last 5 years and commenting on the economic growth rate in this period", group 4 hopes to learn and analyze the basic sit

UNIVERSITY OF LANGUAGES AND INTERNATIONAL STUDIES

ASSIGNMENT MACROECONOMICS

TOPIC: ANALYSIS OF GDP STRUCTURE OF VIETNAM IN THE LAST 5 YEARS GIVING COMMENT ON THE RELATIONSHIP BETWEEN SAVING AND

INVESTMENT DURING THIS PERIOD?

Pham Thi Bich Lien Nguyen Thi Hong Hue

Hy Thi Phuong Hoang Minh Anh Tu Nguyen Thi Kieu Linh Dang Thi Lanh Tran Thi Hien

Table of Contents

I Introduction 3

II Content 4

A Theoretical basis 4

1 What is GDP? 4

2 GDP structure ( GDP- Gross Domestic Product) 4

3 Method of determining GDP 4

4 Meaning and role 6

III Analysis of GDP structure from 2017-2021 6

A Analysis of GDP structure in 2017-2018 6

1 Growth 6

2 Investment 7

3 Inflationary 7

B Analysis of GDP structure in 2019-2021 8

1 GDP structure by economic sectors 8

2 Comments on GDP structure from 2019-2021 9

IV Commentary the relationship between save and investment 9

1 The concept of saving and investing 9

2 The relationship between saving and investment 9

V Conclusion 11

VI Reference 11

I Introduction

GDP is a basic expenditure that reflects the economic growth, economic size, level of economic development per capita, economic structure, and changes in the price level of a country it

is an important tool that is widely used internationally to survey developments and changes in the national economy

Vietnam is currently a developing country with a relatively stable market economy From a poor country, spending within a few decades has risen to become a country with a strongly developed economy, an economy that has continuously maintained a decent growth rate, and a dynamic market economy With the topic: "Analyzing the structure of Vietnam's GDP in the last 5 years and commenting on the economic growth rate in this period", group 4 hopes to learn and analyze the basic situation GDP structure, GDP growth rate of our country in recent years Although we have tried our best, due to many objective and subjective reasons such as the prolonged quarantine period, the concepts identified in the subject are relatively new and difficult to grasp fully and accurately The data, news related to the topic should certainly not avoid errors

We are looking forward to receiving the sympathy and sincere suggestions from Mr Hoang Tuan

We sincerely thank you

II Content

A Theoretical basis

1 What is GDP?

Gross Domestic Product GDP measures the total market value of all final goods and services produced within a country's economic territory, during a given period (usually a period of time) GDP is an indicator of the total value calculated at market prices (expressed in money, eg USD / billion VND) GDP is the number derived when applying a monetary measure to the multitude of different goods and services an economy produces using land, labor, and capital resources

2 GDP structure ( GDP- Gross Domestic Product)

 Nominal GDP is an indicator that measures the total value of goods and services at

current prices (actual prices)

- Symbol: GDP N(GNP N)−GNP N

t

(GNP N t

)=∑P i Q t i

 Real GDP is a measure of total GDP value of goods and services at fixed prices

(relative prices)

- Symbol: GNP R(GDP R)−GNP R

t

(GDP R t

)=∑P i

0

Q t i

Changes in GDP can be caused by:

 Changes in prices

 Changes in output

Changes in real GDP only due to changes in output because real GDP is determined based

on fixed prices of the base year

Real GDP is the indicator better to gauge a country's economic growth

3 Method of determining GDP

a) Calculate GDP by expenditure method

GDP = C + I + G + NX Where,

 C: Consumption expenditure of households

 I: Spending on investment

 G: Government spending on goods and services

 NX: Net exports

 Household consumption (C) includes:

 Durable goods: cars, furniture,

 Perishable goods: clothes, food,

 Services: haircut, travel

 Investment (I): Spending to buy goods and services for future use

I (total investment) = Net investment + Depreciation

Includes:

 Investment in purchasing fixed assets: spending to build factories and purchase equipment used to produce other goods and services

 Investment in housing: consumer spending to buy a house

 Investment in inventory: The change in inventory of businesses

 Government spending (G)

 G includes all government spending

 G does not include income transfer expenses such as subsidies

 Net exports (NX): Equals the total value of exported goods and services (X) minus the total value of imported goods and services (IM)

 NX > 0: Export surplus -> Surplus

 NX = 0: Balance

 NX < 0: Trade deficit -> Deficit

b) Calculating GDP by the income or cost method

GDP is calculated according to the cost of the inputs of production plus the costs of depreciation and indirect taxes

GDP = W + I + Pr + R + De + Ti

where:

 W: Wages

 I: Interest

 Pr: Profit

 R: Rent

 De: Depreciation

 Ti: Indirect tax

c) Calculate GDP by production method (Value added method)

 Value added (VA) of an enterprise is the added value of goods and services created by the business using factors of production

 VA = Value of the firm's output - The value of the intermediate goods purchased by the firm to produce a given level of output

 GDP is equal to the total value added of enterprises in the economy GDP=∑VAI

4 Meaning and role

- GDP is a measure to evaluate the performance of the economy, measure the size of the economy, as a basis for building economic development strategies

- GDP is used to calculate a country's economic growth rate

- GDP per capita: assessment of people's living standards

- Determine the change in the general price level

III Analysis of GDP structure from 2017-2021

A Analysis of GDP structure in 2017-2018

1 Growth

Growth continued to record positive signs Inheriting the impressive growth momentum from the first quarter of 2018, the economic situation in the second quarter continued to improve over the same period GDP in the second quarter of 2018 is estimated to increase by 6.79% over the same period, bringing the growth rate of the first 6 months to 7.08%

About demand, particularly prominent is the high growth of the industry and construction sector, estimated at 9.28% over the same period in the first 6 months of 2017 In which, the manufacturing and processing industry alone has an impressive increase 13.02%, (accounting for 16% and contributing up to 2.45 percentage points to the overall growth of the whole economy) In the service sector, wholesale and retail continued to contribute the largest, other services maintained stable growth In particular, accommodation and food services had a relatively high increase and contribution compared to the same period in 2017 (up 7.02% and contributed 0.33 percentage points

to the overall growth) The agriculture, forestry and fishery sector in the first half of 2018 also achieved a breakthrough growth, and made the highest contribution over the past 6 years In particular, this area also witnessed the trend of product restructuring within the agricultural industry towards investment in products of high economic value

2 Investment

In 2018, the Government continued to implement solutions to mobilize investment resources

in the society and accelerate the implementation and disbursement of state budget capital It is estimated that in the first six months of 2018, the total investment capital for social development reached VND 747.8 trillion, up about 10.1% over the same period last year and equal to 32.9% of GDP

3 Inflationary

Inflation is showing signs of increasing again but is still under control Consumer price index (CPI) in the first 6 months increased by 4.67% over the same period last year, while the basic CPI

in 6 months only increased by 1.37% The main cause of inflation in the first 6 months of the year was mainly due to the increase in prices of some main commodity groups such as food, medicine and medical services, transportation and education (see figure below)

Generally, in the first 6 months, the average CPI increased by 3.29% over the same period and the average basic CPI in the first 6 months is estimated to increase by 1.35% over the same period

change, the inflation in the first 6 months of the year was due to cost pushing and mainly due to a number of commodity groups on the way to increase prices such as service prices health and education services

B Analysis of GDP structure in 2019-2021

1 GDP structure by economic sectors

While the financial sector and the food and beverage industry have always been stable and fluctuated around 11% and 10% respectively throughout the period 2017 - 2021, the real estate-construction industry has made a big leap in the year 2019 when it increased sharply from 14.8% (in 2018) to 23.9% - accounting for nearly a quarter of the total number of businesses in the table

In the general growth rate of the whole economy, the agriculture, forestry and fishery sector increased by 2.9%, contributing 13.97% to the growth rate of total added value of the whole economy; the industry and construction sector increased by 4.05%, contributing 63.80%; the service sector increased by 1.22%, contributing 22.23%

In the industry and construction sector, the processing and manufacturing industry continued

to be the growth engine of the whole economy with a growth rate of 6.37%, contributing 1.61 percentage points to the growth rate total value added of the whole economy The electricity generation and distribution industry increased by 5.24%, contributing 0.19 percentage points Mining industry decreased by 6.21%, down 0.23 percentage points due to the decrease in crude oil production by 5.7% and gaseous natural gas by 19.4% Construction industry increased by 0.63%, contributing 0.05 percentage points

2 Comments on GDP structure from 2019-2021

Looking at the GDP growth chart of the last 10 years, especially from 2016-2019, GDP growth has remarkably improved numbers Spending from 6.21% in 2016, Vietnam's GDP has recovered to 6.81% and continues to increase to the highest with 7.02% in 2019, the highest compared to the same period After witnessing a period of strong GDP growth from 2014 to 2015 and then decreasing in 2016 to 6.21%, we see strong growth at the end of the period, indicating a clear recovery of the economy Vietnam in the mentioned period

According to data released by the General Statistics Office, the gross domestic product (GDP)

in the fourth quarter of 2021 was estimated to increase by 5.22% over the same period last year, although higher than the growth rate 4.61% of 2020 but lower than the growth rate of the fourth quarter of 2011-2019

It is estimated that GDP in 2021 will increase by 2.58% (in the first quarter by 4.72%; in the second quarter by 6.73%; in the third quarter by 6.02%; in the fourth quarter by 5.22%) compared

to the previous year due to the epidemic Covid-19 seriously affected all areas of the economy, especially in the third quarter of 2021, many key economic localities had to implement prolonged social distancing to prevent epidemics

IV Commentary the relationship between save and

investment

1 The concept of saving and investing

Saving is the portion of usable income that is not spent on consumption

Investment is understood as putting capital today with the expectation of getting a desired return in the future

2 The relationship between saving and investment

Saving is the result of efficient investment, production and business and thrifty spending, that

is, the gain must be greater than the capital spent; The rest (profit) cannot be spent, but must be

efficient investment.

a) Gross domestic product (GDP, Y)

- Total income = Total expenditure

Y = C + I + G + NX

Where,

 Y = gross domestic product, GDP

 C = consumption

 I = investment

 G = government purchases

 NX = net exports

- Assume closed economy: NX = 0

Y = C + I + G, so I = Y – C - G

 National saving (saving), S

 Total income in the economy that remains after paying for consumption and government purchases

 By definition: S = Y – C – G

 It follows: Saving (S) = Investment (I) for a closed economy

If savings are not enough for investment, there will be a deficit and will become dependent on foreign investment for economic development needs If savings is less than investment, it will turn into a surplus

The growth rate of gross domestic product (GDP) in the period 2016 - 2019 was quite high, at

an average of 6.8%/year Although the economy is heavily affected by the Covid-19 pandemic in

2020, natural disasters, severe storms, and floods in the Central region, the average growth rate in the five years from 2016 to 2020 will reach about 6% per year and belong to the group of industrial sectors the fastest growing country in the region and the world In which, the industry, construction, and service sectors continue to play a leading role, contributing mainly to the overall growth The average growth rate in the period 2016 - 2020 of the industry and construction sector is estimated at 7.45% and that of the service sector at 6.2%; the share of industry and service sectors (including construction) by producer prices in GDP increased from 82.6% in 2015 to 84.8% in

2020 The scale of GDP will continue to expand, by 2020 estimated at 271.2 billion USD, an increase of about 1.4 times compared to 2015; GDP per capita in 2020 will reach USD 2,779, about 1.3 times higher than 2015 Major balances of the economy in terms of savings - consumption, savings - investment, energy, food, labor activities - jobs, etc continue to be secured, contributing

to firmly consolidating the macro-economic foundation The ratio of accumulated assets to GDP at current prices in 2020 is about 26.7%

State budget deficit in the period 2016 - 2019 reached 3.5% of GDP, down compared to the period 2011 - 2015 (5.4% of GDP), in 2020 the state budget deficit is nearly 4% of GDP By the end of 2019, the public debt ratio fell to 55% of GDP, the government debt was about 48% of GDP and the country's external debt was about 47.1% of GDP Due to the impact of the Covid-19 epidemic, the ability to collect budget is lower, creating additional requirements to increase spending, leading to the public debt ratio in 2020 increasing to 55.8% of GDP

the investment-to-GDP ratio both tend to decrease, in which the investment-to-GDP ratio falls more sharply than the savingstoGDP ratio Savings of the state sector (equal to State budget revenue -recurrent expenditure) tended to decrease in the period 2010 - 2018, an average decrease of 3.41%/year and did not meet the demand for investment and development expenditures government, leading to a budget deficit For the private sector, the investment ratio was lower than the savings ratio (to GDP) in the period 2010 - 2018, although this gap has improved a lot compared

to the previous period

State budget revenue in 2021 is estimated at VND 1,563 million, equaling 116.4% of the estimate, up 3.7% compared to 2020 State budget expenditure in 2021 is estimated at VND 1,879 million equal to 111.4% of the estimate

Thus, an economy goes up or down, the trade balance is tilted, the main reason lies in the change in saving and investment

V Conclusion

Vietnam is a developed country with a relatively stable economy From the poorest country, a few decades later, it has risen to a country with a strongly developed economy Especially in the 5 years from 2017 to 2021, our country achieved great achievements in GDP growth and economic development In addition, the economic scale of GDP per capita has increased, the macro-economy with a stable security system, our country's extensive participation in bilateral and multilateral cooperation have elevated our country's position in the international arena economic However, parallel with that achievement, our country still has some limitations The State and Government need to have policies and practical actions to eliminate and limit the negative aspects of our economy

As a student of the Faculty of Economics and Finance, I realize that the country is counting

on the young generation, who must hone their knowledge, make the most of their time, and improve their capacity to keep up with economic developments in the doi moi period, civilized, richer

VI Reference

http://m.baobacgiang.com.vn/bg/kinh-te/369907/bang-qua-dai-dich-covid-19-nhung-nganh-nghe-nao-dang-hot-bac-.html

https://123docz.net/document/9154698-bai-thao-luan-phan-tich-co-cau-gdp-cua-viet-nam-trong-5-nam-gan-day-va-nhan-xet-toc-do-tang-truong-kinh-te-trong-giai-doan-nay.htm? fbclid=IwAR28G7ODzUKIHiVJewGa_ATcfFr1yewBsg8jBT3cH1LT3hAdoNrQlnvfk-E

https://www.baogiaothong.vn/co-do-tiem-luc-va-vi-the-viet-nam-5-nam-nhin-lai- d493297.html?fbclid=IwAR3gKSFjCLbLbsPFEmsNrUfxmk1czVijdsYGU0y1Qq-dcUDGPtZK7TqUUd0