Prime Minister Nguyen Xuan Phuc has reported to the National Assembly (NA) that the domestic economy in 2018 will “reach and exceed all 12 key macro socio-economic goals” (see box for details), laying important groundwork for the country to continue accomplishing well in all similar goals for 2019 and beyond.
“The economy’s size has increased by 1.3 times within 2016-2018, with per capita GDP increasing by US$440, and people’s lives increasingly improved. It is projected that we will succeed in fulfilling all goals for the five-year socio-economic development plan for the 2016-2020 period set by the Party and the NA,” the prime minister stated.
According to the NA Economic Committee, the economy will continue benefiting from positive impacts of the global continued economic recovery, with the country’s trade and foreign direct investment (FDI) remaining at high levels.
“After three years of implementing the socio-economic development plan for the 2016 – 2020, the economy remains strong in its growth trajectory, with big improvements in growth quality and pace,” said the committee’s Chairman Vu Hong Thanh.
The economy’s size has been expanded significantly, at US$205.3 billion in 2016, US$223.7 billion in 2017, and an expected US$240.5 billion in 2018, which is 1.33 times higher than that of 2015.
The economy also grew from 6.21% in 2016, 6.81% last year, and is expected to climb by at least 6.7% this year. On average, the rate stood at 6.57% in the 2016-2018 period, higher than the 5.91% growth rate for the 2011-2015 period.
Improvements in growth quality
According to the NA Economic Committee, over the past few years, the economy’s structure has also changed positively, with the ratio of the agro-forestry-aquatic sector in GDP reducing from 17% in 2015 to 14.44% in 2018; the ratio of the industrial and construction rising from 33.25% in 2015 to 34% this year; and the ratio of the service sector also increasing from 39.73% in 2015 to 41.61% in 2018.
Moreover, the trade balance has shifted from a trade deficit to a trade surplus for three consecutive years, at US$1.68 billion in 2016, US$2.112 billion in 2017, and US$1 billion this year.
It is expected that Vietnam will witness a total export-import turnover of US$475 billion this year – up 11.7% on-year, including US$238 billion for exports and US$237 billion for imports.
One of the most eminent points in the economy which the government has affirmed is that the economic growth quality has significantly improved, with the contribution of the total-factor productivity (TFP) being on the rise.
Specifically, the TFP ratio in the economy sat at 33.58% in the 2011-2015 period, and 45.47% last year. TFP is a measure of the efficiency of all inputs to a production process. Increases in TFP result usually from technological innovations or improvements.
Meanwhile, the economy’s labour productivity has increased by 6% last year, up from the average annual 4.3% rate in the 2011-2015 period.
Moreover, the economy’s incremental capital output ratio (ICOR), which tells how much additional capital would be required to produce a unit of growth, has also improved. The ICOR was 6.42 in 2016, and 6,11 in 2017.
Thanks to the government’s pro-business policies, the number of newly-established enterprises has been growing, from 110,000 registered at $38.74 billion in 2016 to 127,000 ($56.34 billion) last year. It is expected that a record number of 130,000 enterprises will be newly established this year.
A rise in FDI
“Notably, FDI into Vietnam has continuously been increasingly, both in registered and disbursed FDI. Especially, FDI into the manufacturing and processing sector has also been on the rise, with investment effectiveness significantly improving,” Thanh said.
It is expected that total FDI disbursement this year is estimated to hit a record US$18 billion, up from the record figure of US$17.5 billion last year.
The Asian Development Bank (ADB) last week released its Asian Economic Integration Report 2018 stating that Vietnam is the eighth largest FDI recipient in Asia, with US$14.1 billion in 2017, US$12.6 billion in 2016, and US$8.4 billion in 2012, after China, Hong Kong (China), Singapore, Australia, India, Indonesia, and the Republic of Korea.
Vietnam’s registered FDI in the 2016-2018 period is estimated to be US$97.5 billion, up 79.5% against the 2011-2013 period, and up 40% against the initial plan for the 2016-2018 period.
Meanwhile, disbursed FDI for the 2016-2018 period is estimated to be US$51.3 billion, up 57.6% against the 2011-2013 period, and up 22.8% against the initial plan.
Optimistic international eyes
“Many international organisations have forecast that Vietnam’s economy will continue its high growth this year, with the ADB (6.9%), the World Bank (6.8%), HSBC (6.5%), ANZ (6.8%), IMF (6.6%), and Standard Chartered (7%),” the prime minister stressed.
Spain-based FocusEconomics, which provides in-depth economic analysis globally, told Nhan dan Online that Vietnam’s economy is witnessing a bright outlook.
“The economy’s strong performance is expected to spill over into next year, thanks to sustained healthy private consumption growth and solid inflows of FDI. The impact of rising US–China trade tensions on the Vietnamese economy remains uncertain.”
“This year’s robust growth is expected to spill over into next year, thanks to healthy private consumption supported by strong private credit growth and rising incomes. The industrial sector should also expand at a stellar pace, supported by strong FDI inflows,” said the firm. “While economies worldwide brace for the impact of rising protectionism, Vietnam could stand to benefit from the US-China trade war through increased market share in the US. While there are downside risks stemming from the trade war, the effects could be partially offset by production relocation away from China into Vietnam to avert US tariff.”
Performance of 12 key socio-economic indexes for 2018:
| Index
|
Unit
|
Plan for 2018
|
Reached targets for 2018
|
Assessment
|
|
| 1
|
GDP growth
|
%
|
6.5-6.7
|
At least 6.7
|
Reached
|
| 2
|
Increase in export turnover
|
%
|
7-8
|
11.2
|
Exceed
|
| 3
|
Trade deficit
|
%
|
<3
|
Trade surplus 0.4 %
|
Exceed
|
| 4
|
Consumer price index
|
%
|
About 4
|
< 4
|
Exceed
|
| 5
|
Total development investment capital
|
%
|
33-34
|
34
|
Reached
|
| 6
|
Reduction in poverty
Poverty reduction in poor districts
|
%
|
1-1.3
4
|
1.5
>4
|
Exceed
|
| 7
|
Unemployment in urban areas
|
%
|
<4
|
3.14
|
Exceed
|
| 8
|
Trained labourers out of all labourers in the economy
|
%
|
58-60
|
58.6
|
Reached
|
| 9
|
Hospital beds per 10,000 people
|
Bed
|
26
|
26.5
|
Exceed
|
| 10
|
People having health insurance
|
%
|
85.2
|
86.9
|
Exceed
|
| 11
|
Operational industrial parks and export processing zones having concentrated wastewater treatment facilities that meet environmental standards
|
%
|
88
|
88
|
Reached
|
| 12
|
Forest coverage
|
%
|
41.6
|
41.65
|
Exceed
|
