Sunday, 23 Jul 2017

Increasing challenges to reach annual GDP growth target of 6.7%

Updated at Tuesday, 04 Jul 2017, 17:36
The Hanoitimes - In the first six months in 2017, the Gross Domestic Product (GDP) of Vietnam enlarged by 5.73%, a growth rate could be deemed an achivement taking into consideration the fact that the Vietnamese economy grew only 5.1% in the first quarter.
In the second quarter, Vietnam attained a growth rate of 6.17%, making the difference of 1.02% compared to the first quarter while the between-quarters difference has been only 0.3 to 0.4%.

However, achieving the GDP growth  target of 6.7% in 2017 requires tremendous efforts in the rest of the year. Shipments in the first six months of 2017 gained 97.8 billion dollars, up 15.5 billion dollars, the highest year on year rise so far.          

Export volume grew in two sectors. The domestic business sector export gained a two-digit growth of 13.8% while in the first six months of last year, this sector’s export only gained 3.4%. FDI sector’s export continued to expand 21%. The rise in quantity (12.9%)  and price (5.27%) are attributable to the overall export growth. The increase in the price of oil while drove up the price of gasoline and gas import and contributed to the CPI increase relaxed the pressure on budget revenue.

Another positive sign comes from the tourism industry. The amount of foreign tourists coming to Vietnam in the first six months reached 6.21 million, an increase of approximately 1.44 million people. Among them, 300,000 people came from China, Korea, Japan, Russia, and the US. This result signaled  an optimistic prospect that the year of 2017 will witness a substantial rise in the amount of tourists,  expected to be 13 million people.
The core inflation remained low (after 6 months, the increase is at 0.2% only, a far lower rate compared to the increase rate of 2.35% of the same period last year). The average inflation of the first six months in 2017 is 1.52%, lower than 1.8% of the same period last year.  The growth of  CPI was mostly due  to increase  in oil, health service and education pricing. Meanwhile, the price for food, a major component in the basket of commodities used to calculate the Consumer Price Index, declined  3.62% in the first six months. Even though this decrease is beneficial to low-income households, a big loss will be incurred for manufacturers. In fact, average consumers have not benefitted from the slow growth of CPI.

The national economy expanded in the second quarter. Manufacturing rose 10.52%. Electricity increased 8%. Retailing  and  consumption services posted a growth of 10.1%. According to experts,   the economy in the first 6 months has exposed some shortcomings, as the growth rate did not match its expected target for the whole year.

The total value of imports reached approx. 18 billion USD after only one month, making a three month turnover of  54 billion USD. The first six months of 2017 posted a  the trade deficit of 2.696 million USD  while trade turnover last year recorded a  surplus of 1.288 billion dollars.

The first six month import-export performance signaled trade deficit for 2017 while Vietnam recorded trade surplus in 2016  which is predicted to have   impact on  the payment balance, forex reserve  and the stability of the exchange rate.

Ngoc Thuy
(Duc Minh -
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