Despite having the GDP of 6,76% in the first half of the year (according to the General Department of Statistics), proving itself to be in a developing trend, the Vietnamese economy has received warnings on risks which can propose negative impacts.
The development in industry, construction, services, agriculture and forestry can clearly be seen to have slowed down. According to the World Bank’s statement, the agricultural products being affected by external factors such as the outburst of the Classical Swine Fever and the reducing international pricing, together with the decreasing supply demands limiting the growth rate of the export-oriented manufacturing and processing sectors are the factors that contribute the most to the reducing growth rate of the economy.
Moreover, due to the climate effects of El Nino, the rice export of Vietnam suffered from a negative growth-trend. In addition, because of the technical barriers applied to the Vietnamese rice import by China, the rice export to this country decreased to only a quarter of the same figure from last year. This led to an increase of 1,3% in agriculture, which is much lower compared to the 3,07% figure in 2018.
The total export turnover for the first six months of 2019 increased by only 7,3%, which was much lower than the figure of 16,6% in the same period last year. Both domestic and FDI products suffered heavily with domestic products including rice, coffee, cashew, cassava, and fishery all decreased. Regarding the FDI products, the export of some key industrial products such as mobile phones, electronics, and textiles increased slowly. Being a highly-opened economy with a development rate which is heavily-depended on export, a reducing export turnover is clearly a warning for Vietnam. Moreover, according to several forecasts, the export turnover can still be further damaged by major events transpiring in the world, including the America-China trade dispute, or the Korea-Japan tension.
Together with the positive increase of roughly 10% in import in the first half of 2019 is the sharp rise to 1.7 billion USD in car import, affecting the domestic car manufacture. This indicates that in addition to using preferential policies for manufacture and consumption of locally-produced cars, Vietnam also needs to raise its protectionist barriers.
Is still having many unexpected factors and is slowing down, the growth rate of 6,76% of Vietnam can still be considered middling, and it is not going to be a challenge to reach the development goal of 6,8% (as stated in the Directive 16/CT-TTg on the building of socio-economic development plans and State budget estimates for 2020). However, the real challenge is how to turn 2019 into a booming year with better developments than those in 2018, setting the foundation for further development in the future, which right now is rather difficult.
The World Bank recommended Vietnam to be prepared to adjust the microeconomic policies in order to further stimulate its development, including policies regarding monetary.
In fact, there are still signs indicating that the Vietnam economic situation is going positively, such as the increasing PMI figures in the first 6 months of the year reaching 52,5 points while the same figures in Japanese, Korean, Malaysian or Taiwanese economy reducing to below 50 points. This shows that the industrial manufacture of Vietnam will be in a positive situation in the coming period, contributing to the economic development.
However, it is still a long way to go in order to reach a real economic boom.
>>> Vietnam’s 2019 economic overview