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7.02% GDP growth rate scenarios: the pressure to reform

Last update: 16:00 | 10/07/2018

VietNamNet Bridge - Economists agree that Vietnam may obtain 7.02 percent GDP growth rate this year, but there are challenges to overcome.


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Vietnam may obtain 7.02 percent GDP growth rate this year



The National Center for Socio-Economic Information and Forecasting (NCIF) has projected two scenarios for Vietnam's economic growth in 2018. 

With the basic scenario, which is more likely to happen, the investment of the state economic sector maintains stable growth. Vietnam remains a capital- and export-led economy. The financial system is stable with flexible financial and monetary management.

In such conditions, the GDP growth rate may reach 6.83 percent in 2018, while the inflation rate would be at a low level, about 4.5 percent.

With the more optimistic scenario, the government’s efforts in reshuffling the national economy will bring positive effects, as ‘bottlenecks’ in the economy (land and credit policies, the administrative apparatus) will be eliminated. If so, the GDP growth rate may be as high as 7.02 percent and the inflation rate 4.8 percent. 

With the more optimistic scenario, the government’s efforts in reshuffling the national economy will bring positive effects, as ‘bottlenecks’ in the economy (land and credit policies, the administrative apparatus) will be eliminated. If so, the GDP growth rate may be as high as 7.02 percent and the inflation rate 4.8 percent. 

Both scenarios drawn up by NCIF show the bright panorama of Vietnam’s economy in 2018. However, experts stress that the achievements will be gained only if Vietnam can overcome challenges, especially institutional reform. 

Tran Dinh Thien, a member of the Prime Ministerial Economic Advisory Council, commented that the fundamentals for growth still cannot be laid, and Vietnam’s growth still relies on natural resources exploitation. 

Though Vietnam has begun reducing exports of natural resources, these exports continue to play an important role in the country’s growth.

Vietnam has been developing with low-productivity industries, outsourcing and assembling. 

In terms of competitiveness, enterprises, from state-owned to private, are still weak.

Regarding the business structure, the state economic sector, which makes up 28-29 percent of GDP, is a low efficiency sector. 

The household economic sector with micro businesses makes the greatest contribution to GDP, about 32 percent. The foreign invested economic sector, considered an important part of the economy, can make up 8 percent only. 

Other economists shared the same view, noting that the economic growth rate was high in the first months of the year, but the growth was unsustainable as it depended on foreign-invested enterprises (FIEs). 

The exports from FIEs alone amounted to 70 percent of the country’s total export turnover.

Meanwhile, Tran Quoc Phuong, spokesman for the Ministry of Planning and Investment (MPI), said Vietnam’s economic prospects could not be predicted based on just a few indicators. 


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Kim Chi

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