NA to set targets to sustain momentum
NA to set targets to sustain momentum
Speeding ahead on major growth momentum this year with improved quality, Vietnam will soon set new growth targets for next year, to accomplish the indicators for the 2016-2020 period.
The sixth session of the 14th National Assembly (NA) will kick off this Monday (October 22) by setting socioeconomic targets for 2019, including a growth target of 6.8 per cent, set to be announced (see box).
Minister of Planning and Investment Nguyen Chi Dung told the NA’s Standing Committee at a meeting last week that these targets are based on the current economic uptrend.
“The economy has been growing strongly, with the growth quality improved significantly. This will lay firm groundwork for higher growth next year,” the minister stated, while, on behalf of the government, reading out the government’s report on the socioeconomic situation for 2018 and plan for 2019 to the committee.
“The economy’s growth in 2018 is expected to be higher than the initial target of 6.7 per cent,” he said. “The economy grew by 5.98 per cent in 2014, 6.68 per cent in 2015, 6.21 per cent in 2016, and 6.81 per cent last year.”
According to the report, if the economy grows by 6.7 per cent this year, the total GDP will reach $240.5 billion, higher than last year’s $220 billion. Also this year, per capita GDP is estimated at $2,540 – up $155 against 2017, $325 against 2016, and 1.21 times higher than in 2015.
The government highlighted that the quality of growth has improved significantly, with the total-factor productivity (TFP) on the rise. Specifically, the TFP ratio sat at 33.58 per cent in the 2011-2015 period and 45.47 per cent last year. TFP is a measure of the efficiency of all inputs to a production process. A rise in TFP result from technological innovations or improvements.
Meanwhile, the economy’s labour productivity has increased by 6 per cent last year from the annual average of 4.3 per cent in the 2011-2015 period.
Besides, Minister Dung noted that private sector investment, which plays a crucial role in economic growth, is also on the rise. Specifically, this type of investment is estimated to occupy 42.4 per cent of total investment this year, higher than the 40.6 per cent last year and 38.9 per cent in 2016, as well as the average of 38.3 per cent during 2011-2015.
“All sectors in the economy have been developing comprehensively this year, creating great momentum for higher growth,” the minister said. “For example, the agro-forestry-fishery sector is expected to rise to a high level (3.3 per cent), while the industrial and construction sector and the service sector are forecast to grow by 7.59 and 7.35 per cent, respectively. The total revenue of retail and service consumption is also projected to climb by 10.5-10.8 per cent in 2018.”
Notably, according to the minister, the processing and manufacturing sector, which contributes 80 per cent of the economy’s industrial growth, continues its strong uptrend, at 11.9 per cent in 2016, 14.5 per cent last year, and 12.9 per cent in the first nine months of this year. The rate is expected to be 13.6 per cent this year.
“All of these improvements which follow the government’s sound investment and business policies have also increased the confidence of businesses and investors,” Minister Dung said.
It is expected that a record number of 130,000 enterprises will be established this year, up 2.5 per cent against last year.
Vu Hong Thanh, Chairman of the National Assembly’s Economic Committee, said that the economy has been clearly growing with improved quality.
“One of the most outstanding points is that the trade balance has shifted from a deficit to a surplus over the past three years. Moreover, the attraction and disbursement of foreign direct investment (FDI) have also been increasing. Especially, the ratio of FDI in the processing and manufacturing sector has also been growing,” he said.
According to the government, Vietnam will likely witness a total export-import turnover of $475 billion this year – up 11.7 per cent on-year, including $238 billion for exports and $237 billion for imports. This will lead to a trade surplus of $1 billion for 2018.
Besides, total FDI disbursement this year is estimated to hit a record $18 billion, up from the $17.5 billion record of last year.
According to the Ministry of Planning and Investment, if the economy grows by 6.7 per cent this year, the average growth rate over the past three years will be 6.57 per cent, which is far higher than the 5.91 per cent in 2011-2016.
For 2019 and 2020, the average growth rate of Vietnam is expected to be 6.9 per cent, thus bringing the average growth rate for the whole five-year period to 6.71 per cent. The government earlier set a target of 6.5-6.7 per cent for growth for the 2016-2020 period.
Recently, many international organisations have released optimistic forecasts on Vietnam’s economic growth for 2018 and 2019, such as Standard Chartered Bank (7 per cent for 2018 and 6.9 per cent for 2019), the World Bank (6.8 and 6.6 per cent), the Asian Development Bank (6.9 and 6.8 per cent), Fitch Solutions (7 and 6.8 per cent), and Oxford Economics (7.9 and 7 per cent).
“Vietnam’s economic performance was broad-based, driven by rigorous manufacturing expansion, bumper agricultural production, the robust performance of the services sector, resilient domestic consumption, and strong investment fuelled by FDI and domestic enterprises,” said Eric Sidgwick, ADB country director for Vietnam. “Economic growth will likely hold up well in the near term buoyed by resilient domestic demand, improved business conditions, and stable macroeconomic environment. Anticipated increase in public capital expenditure in the second half of the year is expected to boost the growth in investment,” he said.
