Vietnam’s economic growth to hit decade high

08:32 | 16/05/2018 Society

(VEN) - Vietnam’s 7.38 percent gross domestic product (GDP) growth in the first quarter of the year signals a decade record for annual GDP growth.

vietnams economic growth to hit decade high

Optimistic scenarios

The Asian Development Bank (ADB) and two Vietnamese leading macroeconomic advisory agencies - the Central Institute for Economic Management (CIEM) under the Ministry of Planning and Investment, and the Vietnam Institute for Economic and Policy Research (VEPR) under the Vietnam National University - have issued optimistic 2018 scenarios about Vietnam’s macroeconomic outlook and GDP growth.

According to the ADB, the Vietnamese economy will expand by 7.1 percent this year, before easing back to 6.8 percent in 2019. Vigorous manufacturing and export expansion, rising domestic consumption, strong foreign and domestic investment, and an improving agriculture sector will drive Vietnam’s robust economic growth, ADB Country Director for Vietnam Eric Sidgwick said.

The CIEM forecasts a 2018 growth of 6.67 percent. Nguyen Anh Duong, head of the Department of Macroeconomic Policy under the CIEM, said macroeconomic stability would create favorable conditions for growth. Vietnam’s GDP growth is forecast to reach 6.83 percent this year, the VEPR said. According to the VEPR, the 2018 growth model will be different from that of previous years with growth in the remaining quarters not as strong as in the first quarter.

Feasible inflation target

On January 1, 2018, the government issued Resolution 01/NQ-CP on major tasks and solutions guiding implementation of the 2018 socioeconomic development plan and state budget estimates.

In the resolution, the government set a 6.7 percent GDP growth target for 2018, consumer price index (CPI) growth below four percent, and increased labor productivity to more than six percent.

In addition, the government seeks to curb public debt at 63.9 percent of GDP with government debt at 52.5 percent of GDP and external debt at 47.6 percent. Relevant ministries must urgently identify and amend management measures on pre- and post- customs clearance for import and export goods subject to specialized inspection to reduce by at least 50 percent the goods subject to specialized inspection before customs clearance. Moreover, the government will strive to reduce and simplify half its current conditional business requirements in 2018 in an effort to improve Vietnam’s business climate to boost growth.

After the success of 2017, there are very high growth targets, which require close guidance of the government and fierce participation of ministries, departments and localities.

To achieve these targets, Prime Minister Nguyen Xuan Phuc has asked ministries and departments to issue clear instructions, keep on top of the situation and take suitable measures.

Acording to experts, Vietnam’s GDP growth this year is likely to reach and exceed 6.7 percent, while CPI growth is expected to be lower than the target. CIEM Director Nguyen Dinh Cung said the current growth context is similar to the situation during the 2005-2008 period when the economy grew more than seven percent. “The government needs to focus on promoting economic restructuring and reforming growth models in order to improve growth quality,” Nguyen Dinh Cung said.

CPI growth is predicted to be lower than the benchmark of four percent set by the National Assembly. Experts say Vietnam’s capacity to cope with adverse changes has been improved and thus keeping the inflation rate under four percent is an achievable target.

Quang Loc