Econ
Positive forecasts for Vietnam’s GDP growth
Vietnam’s economy is projected to continuously maintain good performance next year with GDP to expand roughly 6.8 percent despite both internal and external challenges.
The Ministry of Planning and Investment (MPI) has recently forecast GDP to rise by 6.6-6.8 percent in 2019 after the country’s economic growth reportedly hit eight-year high of 6.98 percent in the first nine months of this year, helping it ease to meet the 6.7 percent target set for 2018 by the National Assembly.
Tran Quoc Phuong, head of MPI’s National Economic Issues Department, forecast that Vietnam’s economic growth prospects in the next two years will continue positive thanks to the country’s stable macroeconomy and confidence improvement of both foreign and local firms on the country’s business and investment environment.
Echoing Phuong, Nguyen Bich Lam, head of the General Statistics Office, also forecast that production expansion, a stable macroeconomy coupled with inflation under control are creating impetus for the Vietnamese economy in the coming years.
In a recent report, Asian Development Bank (ADB) also forecasts GDP growth of 6.8 per cent for Vietnam in 2019.
According to ADB analysts, Vietnam’s economic growth will likely hold up well in the near term, buoyed by resilient domestic demand, improved business conditions and a stable macroeconomic environment. An anticipated increase in public capital expenditure in the second half of the year is expected to boost the growth in investment.
“Prospects for private consumption continue to be bright, while the outlook for private investment remains stable under the government’s continuing efforts to improve the business environment and facilitate the opening of new businesses,” the report noted.
The forecast is feasible as MPI Minister Nguyen Chi Dung reported that economic indicators in the past nine months showed almost industries and sectors have growing and the development is sustained.
Challenges remain ahead
Despite the positive forecasts, experts said that the Vietnamese economy, however, remains vulnerable to external and domestic challenges as the global economy is becoming more complicated with the accelerating US-China trade conflict.
According to Eric Sidgwick, ADB country director for Vietnam, growth moderation in major economies such as China, the European Union and Japan could dent export opportunities for Vietnam.
Continued trade frictions between the US and the China could have spill-over impacts on Vietnam’s external trade and FDI. Domestically, unfavorable weather could also undermine agriculture output and mining production, Sidgwick said.
Besides, experts said despite the downward revision for growth this year, inflationary pressures are likely to persist over the near term. VND has exhibited more weakness since July and could come under continued pressure as US interest rates rise and the dollar strengthens. Depreciation of the renminbi against dollar, if it continues, could further put pressure on VND, adding to inflation.
The rise in international oil prices will also raise the pressure on inflation, as would an upsurge in food prices. Average annual inflation is therefore projected to edge up to 4 percent in 2018 and further to 4.5 percent in 2019 by ADB, both projections higher than the bank’s previous forecasts.
Amidst the potential challenges, the MPI has set out a number of key tasks and solutions for next year to achieve the targets, including continuously strengthening macroeconomic fundamentals, increasing the resilience of the economy, steadily controlling the inflation and improving the business and investment environment.
Breakthroughs in reforming the growth model, raising the growth quality and improving productivity and competitiveness of the economy must be also taken to be able to create significant changes in each industry and sector, especially in the context of implementing the national strategy on the Fourth Industrial Revolution, the MPI emphasized.
Macroeconomic stability will create impetus for Vietnam’s economy next years
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Echoing Phuong, Nguyen Bich Lam, head of the General Statistics Office, also forecast that production expansion, a stable macroeconomy coupled with inflation under control are creating impetus for the Vietnamese economy in the coming years.
In a recent report, Asian Development Bank (ADB) also forecasts GDP growth of 6.8 per cent for Vietnam in 2019.
According to ADB analysts, Vietnam’s economic growth will likely hold up well in the near term, buoyed by resilient domestic demand, improved business conditions and a stable macroeconomic environment. An anticipated increase in public capital expenditure in the second half of the year is expected to boost the growth in investment.
“Prospects for private consumption continue to be bright, while the outlook for private investment remains stable under the government’s continuing efforts to improve the business environment and facilitate the opening of new businesses,” the report noted.
The forecast is feasible as MPI Minister Nguyen Chi Dung reported that economic indicators in the past nine months showed almost industries and sectors have growing and the development is sustained.
Challenges remain ahead
Despite the positive forecasts, experts said that the Vietnamese economy, however, remains vulnerable to external and domestic challenges as the global economy is becoming more complicated with the accelerating US-China trade conflict.
According to Eric Sidgwick, ADB country director for Vietnam, growth moderation in major economies such as China, the European Union and Japan could dent export opportunities for Vietnam.
Continued trade frictions between the US and the China could have spill-over impacts on Vietnam’s external trade and FDI. Domestically, unfavorable weather could also undermine agriculture output and mining production, Sidgwick said.
Besides, experts said despite the downward revision for growth this year, inflationary pressures are likely to persist over the near term. VND has exhibited more weakness since July and could come under continued pressure as US interest rates rise and the dollar strengthens. Depreciation of the renminbi against dollar, if it continues, could further put pressure on VND, adding to inflation.
The rise in international oil prices will also raise the pressure on inflation, as would an upsurge in food prices. Average annual inflation is therefore projected to edge up to 4 percent in 2018 and further to 4.5 percent in 2019 by ADB, both projections higher than the bank’s previous forecasts.
Amidst the potential challenges, the MPI has set out a number of key tasks and solutions for next year to achieve the targets, including continuously strengthening macroeconomic fundamentals, increasing the resilience of the economy, steadily controlling the inflation and improving the business and investment environment.
Breakthroughs in reforming the growth model, raising the growth quality and improving productivity and competitiveness of the economy must be also taken to be able to create significant changes in each industry and sector, especially in the context of implementing the national strategy on the Fourth Industrial Revolution, the MPI emphasized.
