In overall, Vietnam’s GDP growth rate in 2018 is expected to be at 6.83%. “This growth rate is in line with the target set by the National Assembly,” said Nguyen Duc Thanh, Director of VEPR at the event. 

However, the report also raised the question of how the record growth rate in the first quarter can diffuse its benefits to the economy and the society.  VEPR noted the number of newly established enterprises and job creations are not proportional to such growth rate, and even lower than the number of job creations in the first quarter of 2017.

Specifically, in the first quarter of 2018, 225.400 new jobs were created, while this number from January to March in 2017 was 291.600. 

Growth rate of labor force in public sector continues its declining trend of 1.2%, while that number in the private sector and foreign direct investment (FDI) has been increasing at 3.9% and 4.5%, respectively. 

In term of export, VEPR stated EU is currently the biggest export market to Vietnam with export turnover of US$9.8 billion (up 19.7% year on year), followed by the US and China, with US$9.6 billion and US$9 billion, respectively. 

On the import side, China continues to be the biggest import market with import turnover of US$14.3 billion (up 13.7% year on year), followed by South Korea with US$11.9 billion (up 19%), and ASEAN with US$7.3 billion (up 12.3%). 

Substantially, Vietnam’s biggest trade deficit is with South Korea reaching US$7.6 billion. Vietnam mostly import material inputs from South Korea, including electronics, computers and computer components (up52.8%), phones and phone components (up 13.6%).

VEPR assessed for the remaining months of 2018, a potential global trade war can lead the world economy into uncertainties, causing difficulties for export-driven economies such as Vietnam. 

Vietnam’s main driving force being manufacturing and processing continues to have high growth rate of 13.9%. However, the value added created from this sector is mainly from the FDI sector. 

Inflation rate in the first quarter slightly increased compared to previous quarter, partly thanks to monetary easing of the State bank of Vietnam (SBV).

The signing of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is evident to Vietnam’s extensive effort of integrating into the world economy. However, in addition to its undoubted contribution to economic growth, CPTPP will put pressure on state budget from forgone custom’s revenue. 

VEPR noted  a recent proposal by the Ministry of Finance on the increase of value added tax (VAT). However, as this will put burden on tax payers, the proposal could not ensure a higher contribution rate of VAT in total state budget revenue. 

Instead of putting on new taxes, VEPR suggested there should be a reform within the tax agencies and putting the frequent expenditure under control.