Vietnam Economy Overview

 

Vietnam's economy has been growing relatively equally in all aspects towards inclusivity and sustainability, particularly in 2018 - a pivotal and meaningful year to assess and reshape  the 5-year socioeconomic development plan from 2016 to 2020.

The latest statistics released by the General Statistics Office (GSO) showed that Vietna m's domestic product gross (GDP) in nine months of 2018 was estimated to rise by 6.98 per cent year on year, the highest nine-month growth ever since 2011, illustrating that the economy has retained growth momentum and expansive capacity. The growth is forecast to be close to the government target of 6.5-6.7 per cent, or even exceed 6.7 per cent.

In the first nine months, the agriculture, forestry and fishery expanded 3.65 per cent; industry and construction climbed 8.89 per cent; and services increased by 6.89 per cent. In particular, the manufacturing sector is the main driver of economic growth, reaching as high as 12.65 per cent.

Driven by macroeconomic stability, price index (CPI) was up the consumer 3.57 per cent in the first nine months of 2018, and is expected to stay below 4 assigned by the National per cent as Assembly

The export value was projected at US$179 billion in the nine-month period, up 15.4 per cent year on year. Positively, outpaced the foreign direct investment (FDI) sector. Particularly, the former jumped 17.5 per cent while the latter, 14.6 per cent, including crude oil. The nine-month trade surplus made a record of US$5.39 billion.

Total social investment rose 10.9 per domestic the sector cent year on year to equal 34 per cent of the nation's GDP. The FDI value was estimated US$13.25 billion. at Aggregate demand, total retail sales of consumer goods and services grew by 11.3 per cent. With the price factor excluded, the growth was 8.8 per cent. On tourism, international arrivals reached over 11.6 million from January to September, up 22.9 per cent, and the tourism sector was determined to attract at least 15 million tourists in the whole year.

The country had over 96,000 new companies registering with VN D963.4 trillion in nine months, up 2.8 per cent in entities and 6.7 per cent in capital. Nearly 23,000 businesses resumed operations, 8.5 per cent more than a year ago. Nevertheless, corporate bankruptcies also increased. Vietnam lead the Amway continued to Entrepreneurial Spirit Index, with 92 per cent of respondents considering starting a business and 88 per cent willing to risk failure, compared with the world average of 47 per cent.

Driven by these achievements, Vietnam will complete all 12 targets assigned by the National Assembly in 2018, with eight exceeding and four meeting targets. The budget is expected to be three per cent higher than the estimate and 5.5 per cent higher than in 2017. Impressively, the budget deficit in 2018 is expected at 3.67 per cent, well on par with the National Assembly's target of 3.7 per cent. Total social investment capital is estimated at 33-34 per cent and likely to reach 34 per cent of the nation's GDP. The trade value is hoped to reach US$475 billion, with US$238 billion from exports. The trade surplus was US$1 billion.

In general, given the current pace, Vietnam's GDP growth will exceed 6.7 per cent. If the GDP qrowth is 6.8-6.9 per cent in the fourth quarter, the full- year growth will certainly exceed 6.7 per cent. In particular, the Total Factor Productivity (TFP) is projected to contribute 40.23 per cent, labour productivity keeps rising beyond the National Assembly's target. Agricultural growth is expected at 3.3 per cent in the year, with export value amounting at US$40.5 billion. 

For the whole term, the Government strictly abides by resolutions of the National Assembly and the Central Party. So far, nine 5-year targets have been met and the Government is determined to achieve all socioeconomic targets for the entire term.

Based on socioeconomic projections for 2018, the Ministry of Planning and Investment also sketches out the plan for 2019. Accordingly, the GDP is forecast to rise by 6.6- 6.8 per cent over 2018 Average annualised CPI growth is at 4- 5 per cent.

Merchandise exports in 2019 are expected to reach US$256 billion, up 7 - 8 per cent over 2018, while merchandise imports are projected at US$261 billion, up 10 per cent. Trade deficit will be about US$5 billion, equalling less than 3 per cent of exports. Vietnam's economic forecast is optimistic for 2019 and 2020, especially in macroeconomic stability and confidence in investment and business environment.

However, the Vietnamese economy also faces many shortcomings and challenges, especially complicated developments from the United States- China trade dispute. The guiding spirit of the Prime Minister is accelerating institutional reform, and streamlining apparatus and staffing.

Business and conditioning and specialised testing have been done well, but still need to be further improved. At present, a total of 9,926 lines of goods are subject to specialised inspection and 120 specialised inspection procedures. To date, Vietnam manages to reduce and simplify 1,700 lines and 30 procedures. Vietnam has officially reduced 1,133 requirements, achieving just over 30 per cent as mandated. Thus, we must work harder for the goal. Decrees on reducing business requirements are being finalised by authorities to submit to the Government for promulgation in October. The same action has been done for specialised procedures and affected lines of goods.

In the coming time, the Government and requires ministries, branches localities not to be arrogant about what we have achieved; continue to firmly and uniformly carry out assigned tasks and solutions; closely keep tabs on international and domestic developments to have appropriate and timely counter measures, especially targets on inflation control, macro stability and inflation capped below four per cent.

Spurred by macroeconomic stability and good growth, Vietnam must further improve the socialist-oriented market accelerate economic economy; restructuring, public debt restructuring and institutional reform; enhance labour productivity growth; boost corporate and product competitiveness; and step up equitisation and divestment of State- owned enterprises (SOES), development of private enterprises and start-ups.

International organisations also appreciate Vietnamese economic development.

The Asian Development Outlook (ADO) Report recently released by the Asian Development Bank (ADB) showed that Vietnam's economy keeps growing in 2018 despite internal and external challenges that may affect growth prospects this year and the next. ADB forecasts Vietnam's economy to grow 6.9 per cent in 2018 and 6.8 per cent in 2019 At the same time, inflation is forecast to rise by 3.7-4.0 per cent in 2018 and from 4.0-4.5 per cent in 2019.

According to the World Bank (WB), Vietnam's medium prospects will continue to improve. The country's GDP growth is forecast at 6.8 per cent in 2018 before moderating to 6.6 per cent in 2019 and 6.5 per cent in 2020 as global demand cycle may slow down. 

 

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