Growth in services sector outstrips GDP

Growth in services sector outstrips GDP

The services sector is playing an important role in the nation's economy and contributing significantly to growth, adding value to products in the agricultural, industrial and building sectors, says the Government's website.

However, the sector's growth has many latent problems, it says.

Developed countries around the world have been striving to develop their services sectors as they shift gradually from manufacturing-based economies, helping reduce environmental pollution and reducing reliance on cheap labour. The trend has helped explain why developed economies have seen growing trade deficits in goods, even as they enjoy a trade surplus in services, the site says.

Growth in Viet Nam's services sector and export in services has exceeded GDP growth annually since 2005, with services growing by 6.42 per cent last year against a GDP growth rate of 5.03 per cent and productivity relatively higher than in other sectors.

However, the export of services began to slow in 2009 with the global economic downturn. Between 2005-12, services exports rose by an average of 11.8 per cent per year, with tourism services alone growing by 18 per cent.

Exports of services remain small. Services export as a share of the country's total exports declined from 11.6 per cent in 2005 to just 7.6 per cent last year.

Services as a proportion of the overall economy have also seen a decline since a peak of 44.06 per cent in 1995. And while the number of employees working in the services sector has risen, their contribution to GDP has effectively declined, suggesting problems with labour productivity in the sector.

Last year, Viet Nam saw an overall trade deficit of $3.1 billion in services. The exports of the transport sector alone totalled $2.1 billion, with imported transport services valued at $8.7 billion.

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