VietNamNet Bridge – The targeted GDP growth rate and CPI increase in 2014 of 5.8 percent and 7 percent, respectively, have been approved by the National Assembly. However, the targets, in the eyes of economists, are unfeasible.


Dr. Tran Du Lich, a well-known economist, noted that it would be very difficult to obtain the high GDP growth rate and the low inflation rate at the same time, unless the synchronized monetary and fiscal policies, and a lot of special measures are applied.

Meanwhile, Dr. Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM), said economists seem to be less optimistic than the National Assembly when predicting the economic performance in 2014.

CIEM, for example, predicted the 5.5 percent GDP growth rate for 2014 and 5.7-5.8 percent for 2015. Other institutions have predicted the figures which are 0.2-0.3 percentage points lower than that set up by the National Assembly.

As for the inflation rate, Thanh said, if the GDP grows by 5.5 percent, the CPI would increase by 7 percent. This means that the higher the GDP is, the harder pressure would be put on the inflation.

“The problem here is that the inflation rate is not likely to be congested at 7 percent. Experts think that in order to obtain the 5.8 percent GDP growth rate, the inflation rate would be very high 7.5-8.5 percent,” Thanh said.

What will Vietnam rely on to obtain the high growth rate?

The government plans to increase the public investments as the driving force for the growth by issuing VND170 trillion worth of bonds in the next three years.

With the increased public investments, the government hopes the total investment capital would be equal to 30 percent of GDP to help Vietnam obtain the 5.8 percent growth rate in 2014.

However, Thanh has pointed out that the GDP growth not only depends on the investments, but also relates to other factors, including consumption and export.

The consumption is believed not to see sharp increase in 2014 (it was 2.5 percent in 2013, if not counting on the goods price increase). In terms of export, while the European and US markets have warmed up, the new markets including China have been decreasing.

In fact, the 5.8 percent GDP growth rate is not a far-away goal. However, it would be still unattainable if the problems cannot be solved.

One of the biggest problems of the national economy in 2013, as economists pointed out, was the “dual speed” economy, which means the difference in the growth rates of foreign invested enterprises and domestic enterprises.

While the foreign invested sector has been increasing rapidly, domestic businesses have been struggling hard to survive the macroeconomic uncertainties.

Therefore, the 5.8 percent GDP growth rate would be unattainable if Vietnam only tries to pour more money into the public investments.

Agreeing with Thanh, Lich has warned that if the government issues a big amount of bonds but cannot stimulate the private economic sector and the agriculture production, what Vietnam obtains would be the high inflation instead of the high GDP growth rate.