VietNamNet Bridge - The crude oil price in the world market has dropped to around $40 per barrel, as predicted by management agencies. However, the situation may become even worse, as international analysts believe the price could drop to $20 per barrel.

The West Texas Intermediate (WTI) oil price dropped to $40.25 per barrel on August 21, down by $0.78 per barrel compared with the day before. The price level represented a sharp fall of 57 percent over the same period last year.

In early 2015, when the oil price hovered around $60 per barrel, the Ministries of Finance (MOF), Industry and Trade (MOIT) and Planning & Investment (MPI) drew up three scenarios for the national economy, when the price continues dropping to below $60, $50 and $40 per barrel.

At that time, though the oil price decreased rapidly, government officials and economists were still optimistic enough to think that the $40 scenario, the worst one, would not occur. They thought the price would bottom out at $50-60 per barrel and would bounce back soon.

However, the worst scenario has come true. International institutions have reported that 500,000-3 million oil barrels of oversupply in the world every day, and the situation would continue for at least several months more.

According to the General Department of Customs (GDC), by mid-August, Vietnam had exported 5.7 million tons of oil worth $2.56 billion, lower than last year’s 5.9 million tons and $5.04 billion.

As such, the export turnover has decreased by $2.5 billion. However, if Vietnam had also exported 5.9 million tons this year, it would have lost about $3 billion.

Minister of Planning and Investment Bui Quang Vinh said Vietnam would lose VND1 trillion in tax collections for every $1 drop per barrel of oil. If the oil price falls to $40 per barrel, the figure would be VND70 trillion.

MPI also estimated that if the oil price falls by $40 per barrel, the GDP growth rate would decrease by one percentage point compared with the predicted level.

As such, with the current oil price, the GDP growth rate in 2015 would be 5.2 percent instead of 6.2 percent as initially planned.

According to Bui Trinh, in theory, the 20 percent oil price fall would be enough to make the producer price index drop by 0.8 percent in the first period and 0.3-0.5 percent decrease in the next period.

Some months ago, when the oil price stood at $60 per barrel, Trinh estimated that the GDP would increase by 2-2.13 percent. If referring to Trinh’s calculation, this would not affect GDP growth, even if the oil price is at $50 or $40 per barrel.

CV