GDP inching up strenuously
GDP inching up strenuously
In early 2011, the 11th Communist Party Congress decided that Vietnam needs to obtain the average GDP growth rate of 7-7.5 percent in five years 2011-2015. However, even the modest 5.4 percent growth rate in 2013 is thought to be unattainable.
The GDP growth rate, together with the other four norms, is not likely to reach the target, according to the latest report by the Ministry of Planning and Investment (MPI) about the implementation of the 5-year socio-economic plan 2011-2015.
The other norms include the ratio of investments on GDP, the budget deficit on GDP, the productivity increase in comparison with 2010 and the GDP’s contribution to the state budget.
Just six months after the 7-7.5 percent GDP growth rate target was set by the Communist Party Congress, economists voiced their concern that the goals would be unreachable.
They said the 6 percent target for the five-year period would be more reasonable, while less optimistic economists thought the growth rate could be 5 percent only, if the resources cannot be allocated in a more effective way.
In early October 2011, the government’s report put into discussion at the National Assembly’s Standing Committee put forward two scenarios for GDP growth.
The first one said Vietnam would get the 7 percent growth rate in five years, while the second one said 6.5 percent. As such, both the plans submitted by the government showed the lower figures than the figures approved by the congress.
The Minister of Planning and Investment Bui Quang Vinh then said that at first, the Prime Minister was determined to obtain the targets set by the congress. However, after hearing domestic and international experts, he looked at the situation realistically and decided to adjust the growth targets.
The National Assembly at the end of 2011 ratified the socio-economic development plan in 2011-2015 with the GDP growth rate of 6.5-7 percent.
However, even the 6.5 percent rate remains unattainable in the last three years. According to MPI, the average GDP growth rate in 2011-2013 is 5.63 percent, if calculating GDP with the 2010’s prices.
The GDP growth rate is hoped to be a little higher in 2014, at 5.8 percent. If this comes true, the five-year GDP target would be out of reach.
Nevertheless, MPI believes that the GDP growth rate Vietnam has obtained over the last several years is “acceptable” if considering the external and internal difficult conditions.
The ministry has predicted that the average GDP growth rate for 2011-2015 would be 5.8 percent, or equal to the rate projected for 2014.
However, even the modest 5.4 percent rate target in 2013, in the eyes of many economists, may not become realistic.
Head of the Vietnam Economics Institute Tran Dinh Thien said at the autumn economic forum which ended last week: “I said to the Prime Minister that I cannot understand if this year’s growth rate is higher than the last year’s, once the factors supporting the growth are all weaker.”
According to Thien, the credit growth rate of the first eight months of the year was modest at 6.45 percent, the financial source from the state budget and the agriculture sector both are also weak.
More and more businesses have to shut down as they cannot survive the current difficulties. Meanwhile, the national finance supervision council always emphas that the demand, the factor that stimulates the growth, is very weak.
vietnamnet
