Fuelled by impressive growth in 2017 and optimistic international forecasts, the government has targeted a growth rate of 6.7 per cent this year, on the backs of foreign direct investment and export key drivers.
Prime Minister Nguyen Xuan Phuc last week issued the government’s Resolution No. 01/NQ-CP on socio-economic development plans for 2018, which states that the economy is targeted to expand 6.7 per cent this year, building on the momentum of 2017’s 6.81 per cent.
Phuc said the driving forces of the growth will be a surge in local production, foreign direct investment (FDI), and exports.
The Asian Development Bank predicted last fornight that Vietnam will grow 6.7 per cent this year, higher than the rates of most other countries in East and Southeast Asia. Around the same time, the World Bank also projected that Vietnam will grow 6.5 per cent this year.
“Stronger domestic demand, robust export-oriented manufacturing, and a gradual recovery of the agriculture sector are driving Vietnam’s economy forward,” said the World Bank’s lead national economist Sebastian Eckardt. “Besides, Vietnam has made significant progress in improving its business climate.”
Spain-based FocusEconomics, which provides economic news, indicators, and forecasts for over 127 countries, told VIR that Vietnam will grow 6.4 per cent this year, which is higher than ASEAN’s average (5 per cent) and the rates of Brunei (1.5 per cent), Indonesia (5.3 per cent), Malaysia (4.9 per cent), Singapore (2.6 per cent), and Thailand (3.5 per cent). “The economy remains on a solid trajectory. It is expected to grow at a strong pace in 2018, thanks to a record-breaking expansion of FDI inflows and a robust performance in exports,” said the FocusEconomics forecast.
In 2017, FDI inflows into Vietnam reached $21.27 billion, up 42.3 per cent year-on-year, with disbursement hitting $17.5 billion, up 10.8 per cent. The government’s projections for 2018 stand at $28.5 billion and $17.5 billion, respectively.
The government also forecast that Vietnam’s total export turnover will increase to $231 billion this year, up from 2017’s $214 billion.
Maxfield Brown, senior associate from pan-Asian consultancy firm Dezan Shira & Associates told VIR that Vietnam’s FDI picture will continue to thrive.
“Looking towards 2018 and beyond, Vietnam’s understanding and policy regarding foreign investment will be more important than ever. The country’s ability to meet the expectations of investors and to effectively transfer the benefits of investment inflows to its citizens will determine if Vietnam is able to continue to rise up the value chain effectively,” Brown said.
Under the new resolution, the government also stressed that improving productivity is one of the key solutions to furthering the economy’s growth quality and competitiveness this year. Resolution No. 01 stipulates that a national programme on labour productivity growth be developed. This programme is charged with increasing labour productivity by over 6 per cent this year, up from a 5.29 per cent climb of 2016 and a 6 per cent rise of 2017.
The resolution also targets a total-factor productivity (TFP) ratio in GDP of over 46 per cent, up from 40.68 per cent in 2016 and 44.13 per cent last year. The General Statistics Office reported that based on purchasing power parity in 2011, Vietnam’s existing labour productivity was equal to 7 per cent of Singapore, 17.6 per cent of Malaysia, 36.5 per cent of Thailand, 42.3 per cent of Indonesia, 56.7 per cent of the Philippines, and 87.4 per cent of Laos.