Report shows quantitative and qualitative economic growth

Positive signals

The government’s report shows that Vietnam has reached high and qualitative economic growth in 2019, the economy’s scale continues expanding, labor productivity is quite high, and the growth model continues to change in a positive manner.

Specifically, 2019 is the second consecutive year Vietnam is expected to reach and exceed all 12 targets set by the National Assembly. GDP growth is expected to reach 6.8 percent. Although it is lower than the 7.08 percent increase in 2018, it is equal to the target set by the National Assembly, making Vietnam a high-achieving country in terms of economic growth. The economic scale continues to expand, reaching about US$266.5 billion, while per capita GDP reached US$2,786, an increase of US$196 from US$2,590 in 2018. The growth quality continues improving. The labor productivity grew nearly 5.9 percent, resulting in average labor productivity growth of 5.8 percent per year in 2016-2019, exceeding the annual 5.5 percent growth target for the five-year period.

Growth gradually reduced its dependence on mining and credit increase, gradually increasing its reliance on science, technology and innovation. The processing and manufacturing industry’s contribution to GDP (according to basic prices in 2016-2019) increased from 14.3 percent in 2016 to 15.3 percent in 2017, and 16 percent in 2018. Meanwhile, that of the mining sector decreased from 8.1 percent in 2016, 7.5 percent in 2017 and 7.4 percent in 2018.

Risk of falling behind

Despite the optimistic signals of the 2019 socioeconomic situation, members of the National Assembly Economic Commission pointed out many limitations and difficulties, including some unsustainable elements of macroeconomic stability, and difficult and tardy disbursement of public investment. They also urged improvements in the level of science and technology, productivity, quality, efficiency and competitiveness of the economy, and noted that taking advantage of benefits provided by trade agreements remains a big challenge.

The economic commission said the above-mentioned problems partly explain why in recent years, the economy still faces the risk of falling behind despite improved investment efficiency, growing total factor productivity (TFP) contribution to GDP, improved labor productivity, and high GDP growth.

Therefore, the government should not be subjective, as those factors could have a negative impact on economic growth, inflation control, exports and foreign investment attraction.

Members of the economic commission suggested that the government supplement and clarify some points in the report, including the driving forces for growth, 2019 registered FDI capital that is lower than last year’s, an 80 percent growth in foreigners’ capital contributions to Vietnamese businesses, and causes of low inflation.