groupassignment eco121 topic gdp inflation between vietnam with the us

This trend reflects the stable nature of the Vietnamese economy and the country''''s spectacular growth over the years.Regarding the socio-economic development overview in the period 2016-2

FPT UNIVERSITY- CAMPUS CAN THO

GROUP ASSIGNMENT [ECO121]

TOPIC: GDP & Inflation between Vietnam with the US

Course: ECO121_SP23Group members: 4 Instructor: Đoàn Hoài Nhân

Name of group member Code Contribution(%)1 Lê Thái An CS171944 1002 Nguyễn Thành Yến

Table of content

I) GDP between Vietnam and the US from 2015-present 2

a)GDP of Vietnam from 2015-present 2

b)GDP of US from 2015-present 3

c)Compare GDP between Vietnam and the US from 2015-present 3

II)Inflation between Vietnam and the US in 2015-present 4

a)Inflation of Vietnam from 2015-present 4

b)Inflation of US from 2015-present 4

c)Compare inflation between Vietnam and the US from 2015-present 5

III) The reason why GDP and inflation varies 51)Definition of GDP 5

a)Nominal GDP 5

b)Real GDP 5c) Nominal GDP vs real GDP

2) Definition of inflation6

IV) List of references 8

[BA1710_GA_Group 1]

I GDP between Vietnam and the US from 2015-present:a.GDP of Vietnam from 2015-present:

In general, Vietnam's GDP per capita has the highest growth rate among all countries in the world This trend reflects the stable nature of the Vietnamese economy and the country's spectacular growth over the years.

Regarding the socio-economic development overview in the period 2016-2021, in this period, the economic growth rate is maintained at a relatively high level Average 2011-2015 reached 5.9%/year; 2016-2020 reaching 6%/year; for the 10 years from 2011 to 2020, reaching 5.95%/year Particularly in 2020, although the Covid-19 pandemic had a very heavy impact, it still reached 2.91% GDP scale continued to expand, increasing about 1.4 times compared to 2015; GDP per capita in 2020 will reach about 2,779 USD/person, about 1.3 times higher than 2015 The ratio of accumulated assets to GDP at current prices is estimated to be about 26.7% by2020.

In addition, the quality of growth has been improved, and labor productivity has been markedly improved The average labor productivity growth rate from 2011 to 2015 reached 4.3%/year; 2016 - 2020 increase to 5.9%/year Laborers aged 15 and over working in the fourth quarter of 2020 were estimated at 54 million people For the whole year of 2020, laborers aged 15 and older are working 53.4 million people, including 17.5 million people working in agriculture, forestry and fishery, down 7.2% compared to last year; industrial and construction sector 16.5 million people, up 0.3%; service sector 19.4 million people, up 0.1% This is a welcome result because labor productivity contributes to economic growth and affects everyone, as well as population aging and international economic integration Similar to the increase in productivity, synthetic factors will contribute to higher production results with the same input, improve national competitiveness, and improve social welfare.

Regarding economic restructuring associated with growth model innovation, the focus on restructuring public investment, credit institutions, and state-owned enterprises was focused on implementation and achieved positive results To fundamentally shift from the annual public investment plan to the medium-term public investment plan associated with the annual plan To drastically restructure the system of credit institutions associated with bad debt settlement Industry and intra-industry economic structure changed positively; the proportion of processing industry, manufacturing and application of high technology increased.

In cultural development, building Vietnamese people has achieved positive results The cultural life of the people is increasingly rich, many good traditional cultural values are upheld and promoted The poverty rate will decrease rapidly, to less than 3% by 2020 People's living standards will be improved, focusing on creating livelihoods and improving access to basic social services Social security policies are focused.

A number of socio-economic targets in the recent period have not been achieved: The economic growth rate has not reached the set target; GDP per capita, the share of industry and services in GDP by the end of the period did not reach the set target The productivity, quality and competitiveness of the economy are not high, not really based on science, technology and innovation Social management and development are still limited and have not kept up with development requirements Some manifestations of moral degradation, lifestyle, cultural behavior and cases of domestic violence, child abuse causing social irritation,

In 2023, Vietnam will reach 100 million people and its GDP will reach 10 million billion VND Although Vietnam's economy is experiencing a strong recovery, uncertainties also increase, causing economic growth and import and export to slow down and attract foreign investment without a clear breakthrough.

Promoting successes, not being subjective, complacent and better exploiting the motivations from the existing foundation, proactively identifying and flexibly overcoming challenges, while sharing joy, confidence and pride GDP is about 6.5%; Consumer price index increased by about 4.5%; average social labor productivity growth rate of 5-6%; unemployment rate in urban areas

[BA1710_GA_Group 1] pg 1

is less than 4%; the rate of poor families based on the multidimensional poverty line fell by 1.5%

1-b GDP of the US from 2015-present:

The US economy, in 2013 has prospered, the job market also has many positive signs, so the FED decided to gradually reduce the QE3 package Accordingly, after cutting the monthly bond purchase amount from $85 billion to $75 billion in January 2014, the Fed announced it would continue to narrow the QE-3 bailout package to $65 billion per month in the minutes of the meeting dated February 19, 2013 With the economy's momentum continuing to move in the right direction and the overall positive labor market, the US economy is forecast to grow at 2.8%in 2014, 2.7% in 2015 and 2.7% in 2015 reached 3.1% for the period 2016-2020.

GDP of the United States is based primarily on residential consumption (68%); however, U.S final consumption can stimulate domestic production in the case of final consumption of the domestic product, or stimulate other countries' production in the case of final consumption of imported products Thus, the United States imposes tariffs on Chinese imports first to increase domestic production, secondly to indirectly reduce Chinese production.

Notably, in the fourth quarter of 2021, the US economy grew by 6.9%, although it was hindered by the impact of the strong outbreak of the COVID-19 epidemic caused by the Omicron variant of the SARS-CoV-2 virus.

Previously, economists had predicted that the US economy would grow between 3.4%-7% in thefourth quarter of 2021 US GDP would grow by 2.3% in the third quarter of 2021 compared to the same period last year .

Prices also continued to increase in 2021, peaking in the October-December period, in which thepersonal consumption expenditures (PCE) price index increased by 6.5%, the highest in 40 years.

For the whole year of 2021, the US economy recorded an inflation rate of 3.9% Excluding volatile food items and energy, the US core PCE index increased by 3.3% in 2021 and 4.9% in the fourth quarter of 2021 alone.

US economic growth is strongly motivated by large-scale economic stimulus packages and low interest rate policy.

The growth momentum slowed down at the end of 2021 when the US recorded a new outbreak due to the Omicron variant, causing spending to decrease while economic activities were also disrupted by the impact of the disease.

Strong GDP growth rate will be a solid basis for the US Federal Reserve Bank (Fed) to raise interest rates

c Compare GDP between Vietnam and the US from 2015-present:

In trade relations with the United States, Vietnam always has a trade surplus Vietnam's trade surplus with the United States from 2010 to 2019 increased 4.5 times.

In the period 2010-2019, it was 2.3% for the US and 6.3% for Vietnam The size of the United States reached 18,273 trillion USD, 91 times higher than Vietnam's GDP (Vietnam's GDP in 2019 only reached a very modest figure of 201 trillion USD).

With the comparison of the GDP sizes of the two countries as above and applying the GDP growth rate for the period 2015-2019 for the growth forecast (Vietnam is 6.8% and the United States is 2.4%), Forecast results show that: by 2127, the GDP of Vietnam will be equal to the GDP of the United States (after 108 years from 2019).

Comparing the economic structure of the two countries, Vietnam and the United States, it can be seen that the economic structure of the United States is the healthiest and most efficient, the increase in aggregate demand actually increases the supply side as production value and income.If we compare the US and Vietnam, we can see that the US has a much more stable economic structure.

[BA1710_GA_Group 1] pg 2

The economic structure of Vietnam shows that receiving export products from the FDI sector, including the domestic sector, which is the export of Vietnamese products, actually does not mean much for the people and the economy Vietnam.

II Inflation between Vietnam and the US from 2015-prensent:a Inflation of Vietnam in from 2015-present:

- In 2015, the inflation rate decreased to a record-low 0.63% The lowest inflation rate recorded since Vietnam began tracking inflation is a startling 0.63% The General Statistical Office claimsthat the rapid decline in global fuel prices, which resulted in a low inflation rate in 2015, is the primary cause The economy is tightly controlled in the years that follow, keeping the inflation rate constant at about 4%

- The Covid-19 epidemic has hindered developments and had a significant impact on the expansion of numerous fields and enterprises in 2020 With a modest increase of 2.31% from theaverage in 2019, Vietnam's inflation rate is basically typical in 2020 This has met the National Assembly's goal of achieving less than 4% In terms of the macro economy, the Government has timely and effectively controlled and directed to increase Vietnam's growth with secure macro indicators

- Vietnam's inflation is still under control in 2021, despite being impacted by the Russia-Ukraine conflict and supply chain delays caused by the Covid-19 epidemic Vietnam is a "headwind" in the worldwide trend of high inflation, with an inflation rate of 1.84% One of the few nations with an average inflation rate of 4-6% is Vietnam The inflation rate was 3.21% in 2022, a modest increase

- A decrease in the global GDP is anticipated in 2023, with an increase of only 2.5% (down from a 3.2% rate in 2022) The main economic partners of Vietnam (the US, the EU, Japan, etc.) are atrisk of recession and decline Also, our nation will suffer negative repercussions on exports and FDI These are two crucial elements in Vietnam's GDP growth Experts also noted that Vietnam'smacroeconomic environment is presently comparatively stable (low state debt, low budget deficit, generally stable currency rate, export super continuous for many years ), providing a foundation for macroeconomic stability in 2023 To maintain the CPI below 4.5% in 2023, low inflation below 4% over the previous seven years (2015–2022) will be a solid presumption - The 11 categories of the average consumer price index (CPI) with the highest increases are those related to transportation, which increased by 11.27%, beverages and tobacco, which increased by 3.15%, housing and building materials, which increased by 3.11%, and culture, entertainment, and tourism, which increased by 3.1% Food and food services as a whole had a 4.94% increase in the price index for food and drink consumed outside the home After two years of being significantly impacted by the epidemic, the market for goods and services in 2022has clearly recovered Due to people's heightened need for shopping at the end of the year, commodity prices grew in the first six months, remained fairly stable in the third quarter, and then slightly increased in the fourth The CPI climbed by 4.55% in December 2022 compared to December 2021, while on average, it increased by 3.15% over the prior year, placing it among the nations with moderate inflation Due to the impact of global prices, domestic demand, and the success of the government's supportive policies and actions to combat inflation, the price of products and services fluctuated back and forth.

b Inflation of the US from 2015-present:

- In the US, the inflation rate increased throughout 2015, rising from -0.1% in January to 0.25 and 0.5%, respectively, in October and November A report from the US Department of Labor demonstrates that this nation's inflation rate always rises in the years that follow

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- Inflation will rise by 3.9% in 2021; it will continue to rise, becoming an obsession for people and managers when it rose to 8.5% in March 2022, slightly decreased to 8.3% in April 2022, then shot up to 9.1% in June 2022 - the highest level since 1981; from July

2022 until the present, inflation of the US economy has gradually cooled down, falling to 7.1% in November 2022 Since May 2020, the CPI has not decreased before.

- The consumer price index (CPI), which covers a basket of goods and services, rose by 6.4% over the course of the first few months of 2023 and by 0.5% month over month In the past, analysts predicted that the CPI would rise 6.2% annually and by 0.4% monthly

Core CPI rose by 0.4% MoM and 5.6% YoY when food and energy are excluded, above the forecasts of 0.3% and 5.5% growth

- US analysts predict that the US economy would face difficulties in 2023 due to factors like the Fed's policy of raising interest rates, the labor market's volatility, the public debt ceiling, and rising inflation.

c Compare inflation between Vietnam with US from 2015-present:

The inflation rate in Vietnam has generally been kept under control from 2015 to the present; the lowest years were that of 2015, but there were also years of high inflation, such as that of 2019 (due to the Covid-19 pandemic) Yet, the inflation rate remained constant until 2023, therefore it can be claimed that Vietnam has better control over inflation than the US Since 2015, there has been constant inflation in the US, at an uncontrolled level and expanding in all respects Despite the fact that inflation has slowed recently, figures from January 2023 indicate that inflation may still be what sends the US economy into a recession this year.

III The reason why GDP and inflation varies:1.Definition of GDP

- GDP stands for Gross Domestic Product, which translates to gross domestic product or gross domestic product This is just a consumption number that measures the total market value of all goods and services produced in a country during a given period.

- GDP is just a measure of total market value By using market prices, a wide variety of productswill be combined into a single criterion of value The market price represents the amount that consumers are willing to pay for different goods, so it accurately reflects the value of these goods.

- GDP represents only the types of goods that are legally produced and sold in the market GDP does not account for products produced and sold illegally in the underground economy.- Goods and services included in GDP include: Tangible goods such as food, cars, clothes and intangible services such as haircuts, medical examination, performances

- GDP includes only the value of final goods and services, not the value of intermediate goods GDP also includes only goods and services produced in the present, not including goods produced in the past.

- GDP is calculated according to the economic territory of a country, including production and business units in the form of organizations, individuals and households.

- GDP reflects the value of production over a specific period of time, usually a year or a quarter.

a Nominal GDP

- Nominal GDP, also known as Nominal Gross Domestic Product, is written as Nominal GDP It can be understood that this is an index of gross domestic product (GDP) calculated at current market prices This is considered the monetary value of goods and services produced in a country.

- This GDP index differs from real GDP in that it includes changes in prices due to inflation It also reflects the price growth rate of a particular economy In our country, the concept of Nominal GDP is the value calculated based on all goods and services formed in a territory and in a certain time.

- Thus, it can be seen that the time to calculate the nominal GDP index of a type of good / service will usually be from 3 months, 6 months or 9 months to 1 year This time will

[BA1710_GA_Group 1] pg 4

depend on each specific sector This is an index to calculate the value of products and services in the national economy, including foreign companies operating in Vietnam.

Nominal GDP= (deflator x real GDP) ÷100 GDP deflator = (nominal GDP ÷ real GDP) x 100

Real GDP = Nominal GDP÷GDP deflator

This makes comparisons across time frames much simpler to calculate and analyze Meanwhile, real GDP must be adjusted for inflation.

- Because GDP is one of the most important metrics for assessing the activity, stability, andgrowth of goods and services in an economy, GDP is often viewed from two perspectives:nominal and real

- Real GDP looks at adjusted for the effects of inflation This means that if inflation is positive, then real GDP will be lower than nominal GDP and vice versa.

- Positive inflation will greatly enhance nominal GDP if real GDP is not adjusted for inflation.

- Thus, real GDP is a better basis for assessing the performance of the national economy in the long run, than using nominal GDP.

- Using the GDP deflator, real GDP reflects GDP on a quantitative basis Without real GDP,it would be difficult to tell from nominal GDP alone whether production has actually expanded or is just a per-unit price increase factor in the economy.

2 Definition of inflation:

- In macroeconomics, inflation is the persistent increase in the general price level of goods and services over time and the loss of value of a currency As the overall price level rises, a unit of money buys less products and services than it did previously, hence inflation reflects aloss of buying power per unit of currency When compared to other countries, inflation is the reduction in the value of one country's currency in comparison to the currencies of other countries In the first meaning, the inflation of a currency impacts the economy of a nation; inthe second sense, the inflation of a currency affects the whole economy that uses that currency.

[BA1710_GA_Group 1] pg 5

- Inflation impacts economies in a variety of ways, both positive and negative Negative effects of inflation include an increase in the opportunity cost of hoarding money, and uncertainty about future inflation that can discourage investment and savings decisions If inflation grows fast enough, the scarcity of goods will cause consumers to start worrying about prices going up in the near term The positive effects of inflation include a decrease in unemployment due to nominal rigidity (price-stickiness)

* The relationship between inflation and GDP is very balanced It does not take much to disturb that equilibrium The common agreement is that a little inflation is beneficial For stock market investors, annual GDP growth is critical Profits can only be increased if economic activity rises,which is the primary driver of stock performance However, too much GDP growth is also dangerous because it is accompanied by rising inflation When inflation is higher than interest rates, real returns become negative When inflation rises, people spend more money because they know it will become worthless in the future In the short term, this leads to further growth inGDP, which in turn leads to further price increases This will lead to savings if this continues for an extended period of time This devaluation means that the future value of the money will be lower than it is today As a result, this eats into stock market gains due to lower profits and the purchasing power of the currency.

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