6.7 percent GDP growth rate challenge for Vietnam: economists

As the GDP growth rate was low, at 5.1%, in the first quarter of the year, Vietnam will have to speed up in the remaining months of the year.

To reach the 6.7% GDP growth rate as the government wants, the growth must be over 7% in the last three quarters. Many economists say the mission is impossible.

Vu Thanh Tu Anh, research director of Fulbright Economics Teaching Program (FETP) pointed out that Vietnam’s GDP growth is too dependent on foreign-invested enterprises (FIEs).

FIEs makes up two-thirds of Vietnam’s total export turnover and 40% of Vietnam’s total industrial production value.

The economic growth in the first quarter slowed down to 5.1% from 5.5% in the same period of last year.

This is attributed to the low growth rate of 4.2% in the industry & construction sector (the figure was 6.7% in the last year’s same period).

Industrial production grew by only 3.9% in the first quarter of 2017, the sharpest decline in the last six years, attributed to a sharp decrease of 10% in the mining sector.

There was also a 10.7% decline in phone and phone component exports (it increased by 14.2% in the same period last year).

Samsung Vietnam saw export turnover fall because of the Samsung Galaxy Note 7 scandal. As its exports bring 20% of total export turnover, its problems affected Vietnam’s exports.

Also because of Samsung Vietnam’s exports decrease, Vietnam’s trade deficit decreased by 4.4% in the first quarter of the year, higher than the fall of 1.49% in the first quarter of 2016.

Great challenge

The global economy is warming up. IMF believes that the world economy will grow by 3.7% this year. As for Vietnam, IMF has predicted a growth rate of 6.5%, lower than the target of 6.7% set by the Vietnamese government.

Anh believes that the 6.7% growth rate is an impossible mission. If Vietnam still insists on the high growth rate, it would have to pump more money into the economy and sell more oil. A bigger money supply would lead to high inflation.

HSBC, in its latest report, said all economic indicators of Vietnam remain positive while the country continues to maintain a steady inflow of foreign direct investment.