09:37 | 29/10/2018 Economy- Society
(VEN) - Given satisfactory results of industrial production in the first half of 2018, especially in key sectors, such as textiles and garments, steel, automobile, oil refining and petrochemicals, economists are predicting Vietnam will achieve the growth targets set for the third quarter and the whole year, creating an impulse for further growth next year. However, the impact of trade tensions between other countries is unavoidable.
The Ministry of Planning and Investment recently released a report on the socioeconomic situation of 2018 and the plan for 2019, indicating that the economy continues its growth trend. Notably, the industrial and construction sectors achieved a gross domestic product (GDP) growth rate of nearly eight percent in the first half of the year. Processing and manufacturing industries are replacing investment capital and the mining industry as a new driving force of economic growth.
Saigon Securities Inc. (SSI) recently issued a report on the Vietnamese economy in the first eight months of 2018, indicating that the production index of the electronics industry grew 21.7 percent in August compared with the same month last year and 17.7 percent in the first eight months. Key industries, such as oil refining and petrochemicals, textiles, garments, pharmaceuticals, automobile and steel, also grew strongly. For example, the manufacturing of motorized vehicles grew 28.9 percent in August, the highest growth rate since January 2017. The index of textile and garment production also grew at the highest rate since November 2016, 17.2 percent.
The government has assigned the Ministry of Industry and Trade, from now to year’s end, to check and report on the implementation of free trade agreements, especially those signed with major trading partners; propose specific measures to promote sustainable trade; take the initiative in developing Vietnamese goods distribution channels; and diversify export markets, especially for farm produce.
However, economists are warning that Vietnam might suffer the impacts of trade tensions between other countries, as well as trade protection trends. SSI’s report foresees that the US-China trade war and the strategic confrontation between the two powers creates more risks for Vietnam, an economy with a high degree of openness. SSI observes that foreign currency flows into Vietnam through investment and export activities have helped it maintain macroeconomic stability and promote economic growth. If these resources decline, Vietnam will have to rely more on internal resources by taking various measures to stimulate supply and demand. Protecting domestic manufacturers is a possible measure to stimulate supply, but it will not have the desired effect as long as domestic businesses lack competitiveness.
An August 2018 government resolution requires the Ministry of Industry and Trade to provide guidance on promoting
intensive industrial production by applying high technology to create products of global competitiveness, and
accomplish major projects to increase Vietnam’s manufacturing capacity.