Vietnam – Economic growth: Expectation for the remaining months

The Hanoitimes – The government target economic growth of 6.7% for 2017 has been a hot debate recently, as the end of 2017 is approaching.
For the first 10 months of 2017, thanks to increasing in export, industrial output, high number of tourists coming to Vietnam, strong growth of foreign direct investment (FDI) and positive signs from agricultural production have led to significant improvements in economic performance. In 10 months, export continues its impressive track record and reached 173.7 billion USD, which is approx. export value in 2016 (175.9 billion USD). As such, the Prime Minister Nguyen Xuan Phuc stressed, this year export can reach 210 billion USD (higher than the original target of 188 billion USD), and contributes significantly to the economic growth. 

FDI in the first 10 months also reached 84.6% of the plan, up 5% compared to the same period of last year. From now on until the end of 2017, FDI is expected to be continue with its growing trend, thanks to favorable conditions from the economy, such as the improving business environment. Vietnam has been integrated extensively in the world economy, with many important free trade agreements signed and became effective, as well as the positive opinions from organizations and foreign investors with regard to the Vietnam’s potential for development. The growing trend of FDI is expected to be the driving force for the improvement of export in 2017. Total investment for development in 2017 is expected to increase up to 33.4% of GDP, higher than the original plan and up 12.6% compared to 2016. Increase in consumption is also expected to be positive in the remaining month of 2017.

Economic growth in Quarter 3 of 2017 is significantly higher than previous quarters, as well as the growth in October reached 7.1%, however, in order for Vietnam to reach the GDP target of 6.7% in 2017, economic growth in Quarter 4 must be in range from 7.4% – 7.5%. Recently, despite positive economic performance, Vietnam still faces numerous challenges, such as growing trend of trade deficit, high number of non-performing loans and public debt, high growth in FDI sector compared to the domestic sector, while the declining price of agricultural products in world market will no doubt affect the Vietnamese agricultural products for export.  More over, it is necessary to facilitate the disbursement progress of public fund to ensure the overall growth target. 

Recently, the Prime Minister has assigned related ministries and administrative agencies to review and remove barriers for growth, facilitating administrative reform and improving the business environment, as well as to improve toe national competitiveness. In the upcoming time, Vietnam need to focus on the technology development and productivity. As a middle income country, Vietnam has to take advantage of the industrial revolution 4.0 to catch up with countries in region avoid the middle income trap. High economic growth is one of the priority, but also to keep in mind the growth has to be sustainable. As such, Vietnam needs to continue its effort in transforming the economic model in the direction of improving the growth quality and the competitiveness of the economy.