The stable growth of Vietnam's economy

	Breakthrough to achieve the targets
	Vietnam’s economy expanded by 6.8 percent in 2019
	New-generation FTAs create opportunities, challenges for Vietnam’s economy

Stability

2020 is a pivotal year that ends the five-year cycle with an expected GDP growth of about 6.84%/year (achieving the 6.5-7% target set by the 2016-2020 Plan).

At the same time, it is creating momentum for the five-year socio-economic development strategy cycle from 2020 to 2025 and the ten-year strategy 2021-2030.

Prime Minister Nguyen XuanPhuc said: “We have exceeded the targets set out in the 12thResolution of the Congress of the Party. Economic growth has always been amongthe top countries in the region and the world, people's living standards and quality of life have been significantly improved. These created new positions and forces for our country that help itintegrate more deeply.”

In an additional edition of the Asian Development Outlook 2019, the Asian Development Bank (ADB) reduced its growth forecast for Asia this year and the following year, in which the growth of China and India is forecast to decline due to both domestic and foreign factors. However, for Vietnam, the international agency adjusted the growth rate from 6.8% in the old report to 6.9% in 2019, adjusted to increase from 6.7% to 6.8% in 2020. According to ADB, Vietnam has high growth thanks to the improved business environment, the confidence of investors is maintained and the increase in foreign direct investment.

For domestic experts, the emerging private sector is the main driver for growth, when taking a large position in export turnovers.Even the domestic private sector has higher growth than that of foreign-invested enterprises (FDI). Economic expert, PhD.NguyenDinhCung, said that the investment of the private sector is accounting for a high proportion and continuously increasing, the growth rate of investment is many times higher than that of state-owned enterprises and FDI enterprises. This has been creating a driving force for social investment.

According to Mr. Cung, these achievements are due to the stability of the macro economy maintained by the Government, increasing the confidence of domestic and foreign investors and enterprises. Moreover, the Government has continued to promote administrative reform, improve the business environment, reduce barriers toentryand reduce costs for businesses.The labor productivity is also supported to add momentum to macroeconomics.

Growth must be steady

In 2019, the whole country receivedgood news because Vietnam's Global Competitiveness Index (GCI) increased by 10 places to 67, according to the World Economic Forum's ranking. Vietnam is the country with the strongest growth score, located in the Asia-Pacific region with the highest competitiveness in the world, becoming the champion in the race to improve competitiveness rankings.

However, looking at many other indicators, we still have some limitations, such as low labor productivity index, the number of dissolved enterprises is still high, the growth rate has not overcome the middle-income trap. A report bythe National Economics University shows that if we can maintain the growth rate of 6%/year and 7-8%/year, Vietnam has almost no opportunity to catch up with regional economies by 2045.

Economic expert, PhD. Vo Tri Thanh said that compared to low-growth countries, Vietnam's growth rate is quite good, but compared to the overall, it is clearly not good. Inside the economy, disbursement of public investment remains low, state-owned enterprises slowed down, equitization is slow, not to mention the slowdown of the global economy also dragged down investment capacity as well as import demand. However, Vietnam's economic prospects are still very positive, so the National Assembly has just approved the targets for 2020 with growth of 6.8%, inflation below 4%, and export growth of 7%. In addition, the pressure of monetary policy is not high, low inflation will make the bank industry have more room to lower interest rates, effectively support the economy.

Obviously, our economy faces new opportunities, but the challenges are not small. Therefore, it requires us to have high political determination, great effort, and drastic action, especially to accelerate reforms to liberate and use all resources efficiently, including material and spiritualresources,domestic and foreignresources to move the country forward.