Vietnam economy strives to overcome new challenges

At its regular meeting for June, the Government agreed to continue effectively implementing measures to stabilise the macro-economy and control inflation, and not to adjust the socio-economic targets and goals set for 2014.

According to Director General of the General Statistics Office (GSO), Dr. Nguyen Bich Lam the year's 5.8% GDP growth target is challenging but achievable.

Maintaining pace of growth

Vietnam's first-half economic results have shown many optimistic signals, with important indexes illustrating a recovery and an escape from bottom, Lam said, adding the national economic growth has been maintained, reflected through a greater GDP growth in Q2 than in Q1 and an estimated six-month growth rate of 5.18%, much higher than for the same period of 2012.

The economic structure has been shifting in a positive fashion in three sectors, with industry and construction accounting for 38.7%; services occupying 43.6% and agroforestry and fisheries taking up 17.6%.

Industrial output rose by 5.8% over the same period last year, while six-month inflation, as measured by Consumer Price Index (CPI), was at 1.38%, the lowest in the last 13 years and just one fifth of the year's target, demonstrating the efficiency in Vietnam's inflation control and macroeconomic stabilisation targets.

There have also been positive signals in the enterprise community's business production trend, with an increase of 33% in production capital, 71% in revenue, 75.1% in profit and 34.1% in good exports. Those figures were much greater than the same period last year, indicating enterprises' optimism about the prospect for recovery and development in 2014 and later years.

Export is also a spotlight sector of the national economy, with six-month export revenues soaring to US$70.9 billion, up 14.9% against 2013.

Alongside the encouraging results, the national economy is still being challenged by many difficulties, such as a relatively high number of enterprises going into liquidation, low credit growth and slow disbursement of investment capital from the State budget and Government bonds, according to Director of the Central Institute for Economic Management, Dr. Nguyen Dinh Cung.

Despite being under control, inflation is still at risk of increasing if control measures are not maintained, Cung said, adding that the process of State-owned restructuring remains slow and domestic market demand has not yet shown much improvement.

Diversifying consumer markets

Although the world and domestic economy have been overcoming the crisis period, the search for new consumer markets remains as one of the toughest challenges to the economy as a whole, and enterprises in particular. In the context of global market segmentation, it is not easy to claim a place in global supply chains and even more difficult to maintain markets and global integration but not to be overdependent on any of them.

With East Sea tensions escalating recently, Prime Minister Nguyen Tan Dung has stressed the need to build and operate an independent and self-reliant economy with deep and wide integration into the world economy. Economic relations must be based on the principles of equality and mutual benefits. Agencies at all levels are asked to effectively implement strategic breakthroughs and accelerate the implementation process of the Master Scheme on Economic Restructuring and sectoral restructuring projects in combination with improving productivity, quality, efficiency and competitiveness.

In addition, the Prime Minister has also asked sectors and localities to maintain normal co-operative relations of mutual benefit with China, while proactively working out relevant measures in response to possible negative situations; expanding and diversifying import-export markets; making best use of international trade agreements and commitments; boosting domestic consumption and promoting the 'Vietnamese Prioritise Use of Vietnamese Goods' campaign; and developing a materials zone as a proactive measure to secure input materials for business production.

The recent East Sea proceedings have not had much influence on the national economy, GSO Director General, Dr. Lam said, adding that this challenge also functions as an opportunity to help Vietnam renovate its manufacturing processes and improve the independence, effectiveness and competitiveness of its economy. According to 2012 official import-export statistics, Vietnam's current good exports to the Chinese market accounts for over 11% of the country's total exports revenues, while 25% of its total imports turnover, as estimated by the GSO, are from China.

Under these new challenges, the GSO has consulted with the Ministry of Planning and Investment to design different economic scenarios and submit them to the Government. GSO Director General Lam said that the 5.8% GDP growth target set by the National Assembly for the year 2014 is quite achievable if ministries, sectors, groups and business community take a proactive approach to economic restructuring, with specific solutions and actions under the close instructions and directions of the Prime Minister.

(Source: Nhan Dan Online)