GDP revised upwards by massive 25.4 per cent for 2011-2017 period
Viet Nam’s total gross domestic product (GDP) may increase by 25.4 per cent per year for 2011-17 period after calculation is revised.
The revised GDP will increase to US$275 billion from current $220 billion at the end of 2017. The figure has exceeded $300 billion on the new calculation after the first half of 2019. Viet Nam’s revised per-capita GDP has reached $3,000 instead of $2,590.
The estimate was made two weeks after the revision plan was announced in mid-August.
According to the General Statistics Office (GSO), the reading may change key indicators that are used in calculation such as end consumption, wealth accumulation, gross national income (GNI), total per-capita GDP and incremental capital-output ratio (ICOR).
The revision could boost the country’s total GDP and per-capita GDP, bringing changes to the Government’s socio-economic development policies in the future and have an impact on household spending as Viet Nam approaches the upper-middle income level.
It will not change Viet Nam’s GDP growth targets and its socio-economic development plans as changes of GDP growth rates are minimal in recent years.
The economy will be restructured as industrials, construction and services sectors will be more focused while agriculture, aquaculture and forestry will be less attentive.
There will be opportunities to expand State budget income and Government’s spending. In addition, increased total GDP and per-capita GDP may boost Viet Nam’s activities and efforts in the organisations to which the country is a member.
According to GSO chief Nguyen Bich Lam, the revision would bring Viet Nam’s GDP calculation more in line with international standards. This is the second time the GSO has conducted a review of GDP calculation. In 2013, the bureau revised Viet Nam’s GDP for 2008-12 in which it re-evaluated economic activities of banking and finance, insurance and real estate sectors.
“As Viet Nam is developing a 10-year socio-economic development strategy for 2021-30 and a five-year plan for 2021-25, it (the revision) will help the Government address the country’s future path in 5-10 years,” Lam said.
GDP revision is common around the world but two-digit post-revision GDP growth rate has often happened to emerging economies such as Zambia (25 per cent), Ghana (60 per cent) and Nigeria (59.5 per cent).
In developed economies, revised GDP growth rates have only increased by a few percentage points such as the US (3.6 per cent). China’s revised GDP for 2013 and 2015 rose 3.4 per cent and 1.3 per cent while Germany’s figures for 2013-14 were up 3 per cent and 7 per cent.
In the Southeast Asia, Indonesia in 2015 recorded its revised GDP growth rate was up 6.45 per cent.
Experts have warned the public should not be too excited about the revised figures.
Adjustments are meaningless at present and its impact on the future is the major concern, according to economist Pham The Anh of the Vietnam Institute for Economic and Policy Research (VEPR).
Economic indicators will be better in appearance, Anh said, adding administrative indicators will decline accordingly to the expansion of the revised GDP.
For example, post-revision public debt will fall to below 50 per cent from current 58.4 per cent and the public debt to GDP ratio will drop to 23-24 per cent from the current 30 per cent, he said.
But those figures could also mean the Government will have more room for borrowing and making public investment, he warned.
“If more borrowing means better efficiency, then the economy is boosted. But if the loans are spent inefficiently, the burden weighing on the economy could be enormous,” Anh warned.
The Government and the National Assembly should also increase the limit of economic indicators in accordance with the increase of GDP to make sure absolute figures rise at acceptable rates, banking expert Can Van Luc said.
“It will be risky if economic growth targets are maintained despite the revised GDP,” he said, adding expanded GDP does not mean the State income will rise.