12 economic targets within reach

According to the MPI’s recent report, all 12 economic targets set by the National Assembly for 2018 could be achieved, eight of which may exceed expectations. 

Specifically, the GDP growth rate for 2018 is set to reach 6.7%, while the MPI predicted the agriculture – forestry – fishery sector to reach growth rate of 3.3% this year, thanks to marked improvements recently. 

Additionally, the industry – construction and services sectors are expected to reach growth rate of 7.59% and 7.35%, respectively. 

Vietnam’s nominal GDP in 2018 is forecast to stand at nearly VND5,555 trillion (US$240.5 billion), leading to GDP per capita of US$2,540, up 6.3% year-on-year. 

The consumer price index (CPI), a gauge of inflation, expanded 3.52% year-on-year in the first eight months of 2018, against the government target of 4%. This resulted in an increase by 1.38% year-on-year of the inflation rate during the January – August period. 

The MPI added that the economy is on track to keep the CPI below the 4% target this year. 

Notably, Vietnam’s trade turnover in 2018 is estimated to reach US$475 billion, up 11% year-on-year, of which, export turnover would be US$238 billion, up 11.2% year-on-year and exceed the target of 7 – 8% set by the National Assembly and 8 – 10% of the government. Meanwhile, Vietnam is expected to import US$237 billion worth of goods, up 12.3% year-on-year, leading to a trade surplus of US$1 billion, exceeding the target of having trade deficit below 3% of total trade value. 

Total capital investment in the first six months stood at VND747.6 trillion (US$32.19 billion), up 10.1% year-on-year. The figure for 2018 is estimated at VND1,890 trillion (US$81.41 billion), up 13.3% year-on-year and equivalent to 34% of GDP, which is also at the upper half of the target range set by the National Assembly (33 – 34%). 

Moreover, in the first eight months of 2018, Vietnam has 87,448 newly established enterprises with registered capital of VND878.6 trillion (US$37.84 billion), up 6.9% in registered capital and 2.4% in quantity year-on-year. 

There were also 20,942 enterprises resuming operations during the period, up 0.3% year-on-year, resulting in a total of 108,400 enterprises starting or resuming operations in the first eight months this year. 

The MPI expected Vietnam to have a total of 130,000 newly established enterprises in 2018, up 2.5% year-on-year. 

GDP growth rate of 6.6 – 6.8% in 2019

Based on the socio-economic conditions in 2018, the MPI predicted Vietnam’s GDP in 2019 to reach 6.6-6.8%, while export growth target is expected to reach 7-8% and CPI growth of 4 – 5%.

Vietnam is expected to mobilize investment capital of around VND2,036 – 2,097 trillion (US$87.68  – 90.31 billion), up 7.7 – 11% year-on-year or 33 – 34% of GDP. 

Export turnover is set to reach US$256 billion, up 7 – 8% year-on-year, while imports targets US$261 billion, up 10%, leading to a trade deficit of US$5 billion, below 3% of total trade turnover. 

In addition to a bright outlook for the economy in 2019, the MPI pointed to a number of challenges to the economy, including trade wars between nations, geopolitical risks, growing trend of protectionism and nationalism. 

Moreover, the Vietnamese economy also faces internal shortcomings, such as low technological and economic development level, depleting land and natural resources. There is also significant gap between the domestic and foreign invested sector, especially in trade activities. 

Meanwhile, traditional driving forces of the economy such as investment capital and mining industry are fading and gradually replaced by manufacturing and processing. 

However, most of Vietnam’s manufacturing and processing is found at the lower end of the global value chain, while there has not been any foreign-invested large scale project registered in the 2019 – 2020 period as in previous years.