Oil price fluctuation’s effect on Vietnamese economy over 2014-2015

Vietnam is a net exporter of crude oil, but is a net importer of petrol. recent drop in oil prices has brought about overall benefits to the economy. A policy forum discussing the fluctuations of oil prices took place yesterday in Hanoi on April 25th. This forum was organised by the National Assembly Office and the United States Agency for International Development.

After 4 years of a steady price of $105 USD per barrel, oil prices fell to between $50 and $60 USD per barrel in June 2014. With crude oil exports accounting for 10% of state budget revenue, Vietnam has been heavily affected. However, according to experts, the fall in global oil prices has brought about more pros than cons.

According to estimates, if petrol prices fall 10% more, goods prices will be reduced by 0.57%, and GDP will increase by 0.91%. However, such a situation would present complex difficulties for Vietnamese policy makers who would have to rearrange the country’s institutional, monetary, and fiscal strategies.

According to forecasts, the fluctuation of world oil prices will continue at least until the end of 2015. This brings both challenges and opportunities for Vietnam to accelerate innovation, restructuring the economy towards more efficiency, and economical savings.