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Vietnam economic growth beyond expectations and experts’ opinion

Vietnam economic growth beyond expectations and experts’ opinion

Sunday 20, 10 2019
Vietnam's economy has experienced the strongest growth as its 9-month GDP hit a decade-peak. However, there still exist issues and drawbacks that must be resolved soon for higher and longer-lasting growth.

What’s behind the beyond-expectation growth?

According to a report by the General Statistics Office (GSO), GDP growth reached 6.98%, which is the highest growth rate in the past 9 years. This agency said that the high growth has confirmed assertiveness, timeliness and efficiency in the administration of the Government and the efforts of all ministries in the overall economic growth.

In the overall growth of the economy, the agriculture, forestry and fishery increased by 2.02%, which is lower compared to 2018; industry and construction increased by 9.36%, contributing 52.6% to the general growth; service sector increased by 6.85%, contributing 42.6%. Thus, it can be said that the industry & construction and services have become the core of economic growth of the country. According to the assessment, the industry sector grew over 9.56%, contributing 3.16% to GDP growth. Particularly, processing and manufacturing is the driving force with an increase of over 11.38%, contributing to the GDP growth of about 2.42%. Meanwhile, the mining industry has been growing slowly, reaching only 2.68%, contributing 0.17% to the overall GDP growth of the economy.

This data shows that there are signs of prosperity in economic restructuring, especially when Vietnam's economy is no longer too dependent on crude oil or coal exploitation, or export of minerals for growth as before. In the service sector, the growth rate is high at 6.85%, with sectors such as trade contributing nearly 1% to overall growth. Financial services, banking, insurance contribute nearly 0.5%, accommodation and catering services contribute nearly 0.3% to GDP ...

Vietnam is a bright spot in the world economic map

That Vietnam is integrating rapidly and strongly with the global economy is always highly appreciated by international organizations. Recently, in its report, the Institute of Certified Public Accountants of England and Wales (ICAEW) affirmed that Vietnam's growth is currently the highest in Southeast Asia. The organization cited the economic analysis of 10 Southeast Asian countries to talk about the case, in which if Vietnam's economic growth is expected to be only 6.7% in 2019, this figure is still superior to other regional economies and Vietnam remain Southeast Asia's fastest growing economy.

ICAEW's report stated that the region's overall economic growth in the first half of 2019 slowed by 4% compared to 4.5% in the same period of 2018. In the region, only Vietnam and Malaysia have growth rates which are superior to others (Malaysia is nearly 6%). Meanwhile, the economies dependent on international trade such as Singapore, Thailand and the Philippines experienced not-so-positive rates due to slowing export momentum, which weighed on the growth.

In addition, the Asian Development Bank (ADB) has also issued a statement mentioning Vietnam's growth. In particular, ADB affirmed that Vietnam's economy would maintain high growth in 2019 and 2020, at 6.8% and 6.7%, respectively. "Vietnam's economy is still growing strongly as domestic demand continues to increase and foreign direct investment flows are maintained. The outlook for domestic consumption continues to be bright, supported by an increase in income, job openings, and low inflation," said Eric Sidgwick, ADB Country Director in Vietnam.

What do experts say?

Despite many achievements, we cannot be too optimistic, instead we must understand that the economy has been and will be faced with inherent weaknesses and obstacles from outside. International economy is in turmoil when trade war breaks out everywhere, and protectionism and origin fraud are common. The world is at risk of a crisis in oil prices and escalating monetary wars when some OPEC countries are at risk of political conflict, FED has raised interest rates of USD or China has devalued Yuan ..., which will have a great impact on the global economy in general and Vietnam in particular.

Meanwhile, Vietnam's economy still faces difficulties which cannot be solved soon, one of which is the disbursement of public investment which is still slow, reaching just over 40% of the Government's allocation and less than 40% of the National Assembly's approval. Meanwhile, although the Resolution on improving the investment and business environment of the Government was issued, and many other policies of the Party and Government were introduced, the effectiveness has not been seen, and in many parts of the country, such resolutions and decisions have not been carried out.

At the recent Vietnam Development and Reform Forum held in Hanoi, Dr. David Dollar, senior researcher at the Brookings Institution (USA), said: To improve per capita income, Vietnam needs to ensure high growth and attract investment effectively, and to do so it is vital to have strong reforms. "Vietnam's business environment has improved in recent years, but there are still weaknesses, for example, the bankruptcy process is still complicated, making it difficult for enterprises to declare bankruptcy and increase their scale through business consolidation. ", Dr. Dollar said.

The Country Director of the World Bank in Vietnam, Mr. Ousmane Dione, said: Despite impressive achievements, Vietnam has not yet succeeded in creating effective market institutions. This hinders the healthy development of the domestic private sector.

According to Associate Professor, Dr. Tran Dinh Thien, member of the Prime Minister's Economic Advisory Group, former Director of the Vietnam Economic Institute: While the State economy is changing slowly, new incentives are not available, the ư private sector has become the core of whole economy. "Frankly said, the role of private economy is obviously important! That is the truth and we have to promote the development of private enterprises. The lost opportunity will not be regained, therefore, if the private sector and the State offer support to one another, the country’s economic growth will obtain greater achievements, "said Thien.

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