Vietnam Ranks 45th in WEF’s Financial Development Index

Vietnam ranks 45^th in the 2009 Financial Development Index published by the World Economic Forum (WEF). Vietnam receives a score of 3.0 in 2009 compare to 3.3 in 2008 out of a maximum of 7.0. Other Southeast Asian countries in the index include Singapore (4^th), Malaysia (22^nd), and Thailand (35^th).

According to the report, a low degree of external vulnerability (4th) and a relatively small percentage of external debt to GDP (18th) boost the stability of the country’s banking system. Considerable IPO activity is an advantage in non-banking financial services.

The report recognizes that the effects of financial crises in general tend to fall disproportionately upon the poor and it is important for countries to craft policy responses with these effects in mind.

The WEF Financial Development Index ranks 55 of the world’s leading financial systems and capital markets in 2009, compared to 52 countries in 2008 when Vietnam ranked 49th. The index analyzes the drivers of financial system development and economic growth in developed and developing countries to serve as a tool for countries to benchmark themselves and establish priorities for reform.  The rankings are based on over 120 variables spanning institutional and business environments, financial stability, and size and depth of capital markets, among other factors.

Given the inherent limitations of the data, the index can act as a general indication of Vietnam’s competitivenesss in the world economy. There are currently considerable investments in Vietnam by both the public and private sectors, which need to be maintained and advanced in order to bring the country’s competitiveness in line with that observed in developed countries.