Friday, 19 Jan 2018

Vietnam set GDP growth target of 6.7% in 2018

Updated at Friday, 12 Jan 2018, 17:33
The Hanoitimes - In addition to the high target growth rate, the government also set the Consumer Price Index (CPI) for 2018 at 4%.
That said, CPI target in 2018 is equal to that of in 2017, indicating the cautious approach of the government. In 2018, despite forecast showing a less uncertainty to the economic situation, there remains potential risks to the effort of controlling inflation rate, said Nguyen Tien Thoa, Vice Chairman and General Secretary of Valuation Vietnam Associaiton (VVA). 

For example, price of goods in the global market is on the growing trend, which can potentially impact price of local goods, such as oil, natural gas, coal (global oil price is estimated to increase from US$7 – US$10 to US$60 per barrel); expanding credit, exchange rate; impact from the increase price of electricity; increase in minimum wage; 

“CPI growth rate should be put under close control since the beginning of the year to lay the foundation for high economic growth by the end of the year. Goods supply must be sufficient; reducing expenditure in production, lending rate and toll road. With this being said, it is feasible to control the inflation rate under 4%” – Mr. Thoa said. 

Inflation rate in 2018 is expected to be under pressure from the increase in administrative and food price, informed the economic expert Ngo Tri Long. For the GDP to reach the target growth rate of 6.7%, the application of stimulation measures may lead to a high inflation rate. However, the inflation rate will likely to be maintained at 4% in 2018 and 2019, according to Long. 

With the growth momentum in 2017, there is a high chance that the targets for socio-economic development set by the government in 2018 will be attainable. However, Vietnam should not pay much attention to the growth number, as priority is the growth quality and changes in growth model, macro economy stabilization and controlling inflation rate. 

“Vietnam should focus on economic restructuring effort in association with the conversion of the growth model; set up and develop a strong business community capable to compete in the current context of global integration,” said Dr. Nguyen Duc Thanh, Director of Vietnam Institute for Economic and Policy Research (VEPR). 

Driving forces for economic growth in 2018 will be spread among three sectors: agriculture, industry and service. As such, there are room for development, including: improvement in state owned enterprises (SOEs); disbursement in public investment; private sector development; and foreign direct investment (FDI), evaluated Dr. Nguyen Dinh Thanh.

2018 is proving to be an decisive year in realizing the master plan of developing socio-economic development in period 2016 – 2020. However,  Vietnam’s current low level of quality growth and productivity will be the main obstacles for the country going forward. 

Besides, uncertainty surrounding the global economy will have negative impact to Vietnam’s economy. Therefore, in order to achieve the target growth rate of 6.7% in this year and the average growth rate of 6.5% for period 2016-2020, Vietnam will have to focus on administrative reform, improving the efficiency in governance and business environment. 
Ngoc Thuy
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