Thursday, 24 Aug 2017

Economic performance: growth and challenges

Updated at Saturday, 05 Aug 2017, 14:05
The Hanoitimes - The largest export turnover in the same period so far, the high growth rate of total retail sales of consumer goods and services; and the soaring industrial growth rate over months and quarters are the highlights of Vietnam’s economic performance over the last seven months.
The export turnover is at the highest (over 115.2 billion USD) in comparison to the same periods of previous years. The export  growth was  achieved in two sectors. The national enterprises export registered a two-digit growth (14.6%)  while the foreign invested (FDI) enterprises attained a growth rate of 20.3%. Seven months of the year have elapsed but already 19 commodities have exported volumes worth over one billion USD each.   Some commodities experienced export decrease at the beginning of the year have now recovered including mobile phones and rice. The growth is achieved in both unit price and quantity.
Technological check before release at SamSung Vietnam.
Technological check before release at SamSung Vietnam.
The  growth rate of total retail sales of consumer goods and services has increased higher  than the growth rate of the same period of last year(8.7% versus 8.4%). In addition, the consumer price index (CPI) after seven months has remained far lower than that of the same period last year (0.31% against 2.48%); The average CPI  of 7 months has remained  below the estimation (3.91% vs. 4%). The price of gold in July decreased (0.88%), the price of USD after 7 months decreased (0.09%) and the average increase is lower than that of the same period (1.45% compared to 3.67%). With inflation under control and   exchange rate stable,  foreign exchange reserves has hit a new record of over 42 billion USD.
During the past 7 months, foreign direct investment (FDI) has increased both in registered capital and disbursed capital.

In addition to positive results, the economic performance over the last 7 months still encounters many obstacles and challenges.

The industrial growth, the leading sector in  the era of industrialization and modernization, has slowed down in comparison to that of the same period last year (an increase of 6.5% compared to 7.2%). The mining industry making up  the largest proportion of the sector  still fell sharply. The growth rate of the manufacturing index is lower than the growth rate of the added value of the sector, proving that the share of intermediate costs in total industrial output increases. The share of investment in industry is higher than the share of GDP generated by this sector, indicating a high growth rate of investment in this sector. Industrial – construction labor productivity is only about 5,111 USD, while Japan’s is 39 times that number, Singapore 26 times, Thailand and Philippines 1.5 times. The contribution of technology to the Vietnamese economy is only 29%, while that of the other countries is way higher (Indonesia 39%, China 39%, India 49%, Malaysia 64%, Thailand, Philippines 70%).
The second biggest challenge was trade deficit in this period (US $ 3.08 billion) while in the same period last year the economy recorded trade surplus (US$1.72 billion). It is noteworthy that trade surplus with European, American markets likely to decrease and trade deficit with Northeast Asia and Asean market tends to rise.
The third major challenge was the increase in public debt, resulting in an increase in interest payments on principal and interest payments (26.3% of total expenditure and 29.1% of total revenue). Bad debt is still high, but it is expected that from mid-August onward the issue might be  handled more drastically.
Nguyen Tung - Duc Minh
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