6.7 percent GDP growth rate challenge for Vietnam: economists
To obtain a 6.7 percent GDP growth rate in 2017, Vietnam needs to change its economic structure, experts say.
As the GDP growth rate was low, at 5.1 percent, in the first quarter of the year, Vietnam will have to speed up in the remaining months of the year.
To reach the 6.7 percent GDP growth rate as the government wants, the growth must be over 7 percent in the last three quarters. Many economists say the mission is impossible.
The sharpest decline in industrial growth in past six years
Vu Thanh Tu Anh, research director of Fulbright Economics Teaching Program (FETP) pointed out that Vietnam’s GDP growth is too dependent on foreign-invested enterprises (FIEs).
FIEs makes up two-thirds of Vietnam’s total export turnover and 40 percent of Vietnam’s total industrial production value.
The economic growth in the first quarter slowed down to 5.1 percent from 5.5 percent in the same period of last year.
This is attributed to the low growth rate of 4.2 percent in the industry & construction sector (the figure was 6.7 percent in the last year’s same period).
Industrial production grew by only 3.9 percent in the first quarter of 2017, the sharpest decline in the last six years, attributed to a sharp decrease of 10 percent in the mining sector.
There was also a 10.7 percent decline in phone and phone component exports (it increased by 14.2 percent in the same period oast year).
Samsung Vietnam saw export turnover fall because of the Samsung Galaxy Note 7 scandal. As its exports bring 20 percent of total export turnover, its problems affected Vietnam’s exports.
Also because of Samsung Vietnam’s exports decrease, Vietnam’s trade deficit decreased by 4.4 percent in the first quarter of the year, higher than the fall of 1.49 percent in the first quarter of 2016.
The global economy is warming up. IMF believes that the world economy will grow by 3.7 percent this year. As for Vietnam, IMF has predicted a growth rate of 6.5 percent, lower than the target of 6.7 percent set by the Vietnamese government.
Anh believes that the 6.7 percent growth rate is an impossible mission. If Vietnam still insists on the high growth rate, it would have to pump more money into the economy and sell more oil. A bigger money supply would lead to high inflation.
HSBC, in its latest report, said all economic indicators of Vietnam remain positive while the country continues to maintain a steady inflow of foreign direct investment.
M. Ha, VNN