Senior official: Growth target should not be adjusted

06:00 | 24/04/2020 Society

(VEN) - Vietnam’s gross domestic product (GDP) grew 3.82 percent in the first quarter of 2020, much lower than the 6.8 percent target set by the National Assembly. However, Nguyen Bich Lam, General Director of the General Statistics Office of Vietnam (GSO) under the Ministry of Planning and Investment, said at a recent meeting with the press that the growth target should not be adjusted.

senior official growth target should not be adjusted
Nguyen Bich Lam, General Director of the General Statistics Office of Vietnam

In the context of the complicated and unpredictable development of the Covid-19 pandemic, many sectors and fields have been heavily affected. Could you share the GSO’s economic growth scenario for the rest of the year?

Right from the beginning of the year, the GSO has drawn a scenario for economic growth throughout 2020. Due to the impact of Covid-19 in late January and early February, the GSO has adjusted the growth target after assessing the impact on each sector and field of the economy. In the past, the adjustments were made on a quarterly basis, but in the first quarter of 2020, the scenario was updated three or four times.

Given the 3.82 percent result of the first quarter, the GSO has envisaged three scenarios for 2020 economic growth. Specifically, if Covid-19 is over at the end of the second quarter, growth could top five percent. If the pandemic continues in the third quarter, growth could still top five percent but be lower compared with the first scenario. In the third scenario, the GSO maintains the 6.8 percent growth target unadjusted, with specific scenarios for each remaining quarter.

Right from the beginning of the year, the GSO told the Ministry of Planning and Investment and the government that Vietnam would be hard pressed to achieve the 6.8 percent target in the context of a slowdown in global economic growth, especially major economies such as the US, China, Japan and the European Union (EU). Meanwhile, with a high level of openness, the Vietnamese economy depends heavily on external resources. Many other countries have closed their borders and suspend foreign trade to give top priority to preventing the spread of the coronavirus disease. This situation will affect Vietnam’s economic growth. While the 6.8 percent target will be hard to achieve, the GSO still maintains this scenario.

Do you think the 6.8 percent growth target should be adjusted?

The 6.8 percent target was set before Vietnam faced the outbreak of Covid-19. In the first quarter, while the global economy faced a decline and the pandemic was expanding worldwide, Vietnam achieved 3.82 percent growth. If Vietnam achieves an annual growth rate of more than five percent in 2020, that will be a proud success. Vietnam’s positive economic growth in the context of major economies facing zero growth, a slowdown or even negative growth is the result of drastic measures taken by state authorities at different levels, all sectors, the business community and the people under the government’s guidance to fight the pandemic and maintain production and trade. Therefore, from the viewpoint of the GSO, the 6.8 percent growth target set for 2020 should not necessarily be adjusted. The annual growth target may not be achieved but importantly, we should strive our best and implement synchronous measures to achieve the best possible results.

senior official growth target should not be adjusted
Vietnam’s 2020 economic growth is forecast to be lower than the earlier annual 6.8 percent target

What do you think will be the driving force of Vietnam’s GDP growth in the coming time?

The GSO indicated five factors that will foster Vietnam’s GDP growth in the coming time. First, the driving force comes from institutional improvements. The resolution of problems related to land and administrative procedures will help accelerate the disbursement of public investment capital, especially for major projects that can have widespread effects. The disbursement of every one percent of public investment will result in GDP growth by 0.06 percentage point.

Second, the disbursement of public investment capital will contribute to boosting the disbursement of private and foreign direct investment. It’s necessary to enhance the effectiveness of these investment flows. It is calculated that if the Incremental Capital Output Ratio (ICOR) decreases by 50 percent, GDP will increase by 0.64 percentage point; and if the ICOR is down by 100 percent, GDP will increase by 1.42 percentage points. Therefore, enhancing the effectiveness of investment capital will be a solution in the short and long term.

The third factor is labor productivity. This is the most important driving force of economic growth. If labor productivity increases by one percent, GDP will be up 0.94 percent. When the workforce of the agro-forestry-fishery sector decreases by five percent, the workforce of the industrial and construction sector will increase by 2.5 percent, and that of the service sector will be up 2.5 percent, resulting in a 0.25 percent GDP growth rate.

Fourth, manufacturing capacity should be improved to meet domestic consumer demand. Appropriate attention should be paid to developing the domestic market with nearly 100 million consumers. Stable final consumption is an important factor helping promote GDP growth.

The fifth factor is the combination of various measures to be taken over the rest of 2020.

Due to the impact of the Covid-19 pandemic, in the first quarter of 2020, the agro-forestry-fishery sector grew a mere 0.08 percent; services up 3.27 percent; industry and construction up 5.15 percent. The manufacturing and processing industries grew 7.12 percent, serving as the main driving force of economic growth.

Recorded by Thu Phuong