Vietnamese economy thrives in first half of 2018

But challenges remain, requiring the government, ministries, enterprises and people to make greater efforts to tackle the difficulties.

Bright spots

According to the General Statistics Office (GSO), Vietnam's GDP in the first half of 2018 expanded by 7.08%, of which the first quarter grew by 7.45% and the second quarter by 6.79%.

"This is the highest first-half growth rate since 2011, affirming the government's prompt and effective efforts", emphasised GSO Director, Nguyen Bich Lam.

A breakdown of the sectors shows that agriculture expanded by 3.93%, its highest growth rate during the 2012-2018 period, and contributed 9.7% to the overall growth, while industry and construction grew by 9.07% and made a 48.9% contribution.

Head of the GSO's statistics department Pham Dinh Thuy stated that the brightest spot of the sector was the robust growth of manufacturing activity, surging by a seven-year high of 13.02%.

In addition, the growth rate of services also posted its highest first-half performance in the last seven years, growing by 6.9% and contributing 41.4% to the overall growth.

Challenges

Besides the positive results, the Vietnamese economy is still facing numerous challenges.

According to the GSO Director, Vietnam's growth no longer follows a pattern in which growth in a quarter is higher than that in the previous quarter. Growth in a quarter now outpaces the previous quarter as clearly seen in the first half of the year.

It is forecast that growth in the third and fourth quarter will be slower than the first and second due to the slowdown in a number of sectors.

He added that industry would slacken off as a result of reduced mining activity, while manufacturing will also hardly be able to sustain its current rapid pace in the final months. Unpredictable weather patterns and prices of agricultural commodities could also affect the agricultural sector.

Lam added that inflation remained under control but there are also risks that it might accelerate in the coming months.

Vietnam maintained a trade surplus from January to April but the trade balance returned to a deficit in May and June. Although the country ran a surplus in aggregate in the first six months of 2018, a deficit has been recorded with most of the countries with which Vietnam has signed free trade agreements.

Therefore in order to achieve the growth target for the whole year, ministries and local authorities should focus on measures to address the difficulties facing businesses and accelerate capital disbursement as directed by the government.

Furthermore, the monetary policy should be implemented in a cautious and flexible manner in tandem with the fiscal policy and other measures in order to stabilise the macro-economy, curb inflation and support growth.

It is also necessary to not adjust the prices of many goods and services at the same time and during the final months of the year to prevent their impacts on the consumer price index.