Vietnam’s economic growth is exposed to threats from global trade slowdown and impacts from the US – China trade war, according to Vu Tien Loc, president of the Vietnam Chamber of Commerce and Industry.
President of VCCI Vu Tien Loc.
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According to Loc, the country GDP’s growth target of 6.8% set for 2020 is challenging, particularly as the economy is dependent on foreign investment and exports.
Citing a government report. Loc said that the country’s exports in the first nine months of 2019 expanded 8.2%, nearly half of the growth rate recorded in the same period last year at 15.4% and one third of the average growth rate of 20% in previous years.
Moreover, Vietnam’s export growth in five major markets, including the EU, China, ASEAN, and Japan is slowing down, except for in the US with a surge in exports. However, a rise in exports to the US may pose risks to Vietnam such as punitive tariffs, Loc commented.
In the January – September period, Vietnam exported goods worth US$45 billion to the US, up 28% year-on-year, being one of six countries having the largest trade surplus with the US.
“Vietnam would not be an exception as the US has been taking a hardline approach towards countries with imbalanced trade. The possibility to keep such high exports to the US, accounting for one fourth of Vietnam’s total exports, thus, is slim in the long run,” Loc continued.
Loc also expressed concern over the slow growth in foreign direct investment (FDI) inflows from countries such as Japan and South Korea, while the Southeast Asian country witnessing a sudden rise from China-related investment capital, accounting for nearly 50% of total registered capital.
Loc concluded the trend lacks of sustainability and could cause negative impacts on quality of Vietnam’s economic growth in the long term.
National Assembly deputy To Van Tam said Vietnam economies have been among the fastest growing in the region over the past few years, however, the main driving forces remain cheap labor forces and exports of natural resources and agricultural products.
Tam said these three sources of growth are significant but should not be maintained in the long run, particularly as Vietnam is in the process of improving its productivity.
On the issue, Loc said Vietnam is pushing for reforms, but the pace is slower than other countries. “Without strong reform efforts, Vietnam could face the risk of being left behind,” Loc urged.
Loc said the business community should become Vietnam’s main driving force, however, this is the third consecutive years that revenue from enterprises fell below the target, indicating that the business community is still struggling.
