Vietnamese income has improved significantly, but it has not reached the $3,000per capita threshold as calculated by General Statistics Office, economists say.
GSO announced it has applied a more reasonable calculation method, with which Vietnam’s GDP per capita is $3,000 per annum, or $400 higher than the figure found with the old method.
Under the current applied method, Vietnam’s economy in 2018 had value of $240 billion, or VND5,500 trillion, and the GDP per capita was $2,590 per head per annum.
GSO’s statement surprised many economists.
Bui Trinh, a respected economist, said this is an ‘unexpected result’. He questions the new method of calculating GDP, which GSO has not disclosed.
Trinh surmised that GSO might count the ‘underground economy’ when calculating GDP.
|GSO announced it has applied a more reasonable calculation method, with which Vietnam’s GDP per capita is $3,000 per annum, or $400 higher than the figure found with the old method.|
Whether to take the underground economy into account remains controversial in Vietnam.
According to Trinh, if counting the underground economy, or unobserved economic sector, this will ‘embellish’ the achievements of economic growth. However, this does more harm than good.
If counting the underground economy, the GDP would be higher, while the ratios of public debt on GDP and overspending on GDP would be lower. However, in fact, the exact figures of public debt and overspending have not decreased.
Trinh went on to say that if Vietnam tries to count the underground economy just to increase the GDP scale and prove that the public debt ratio on GDP is lower and the overspending to GDP ratio is not high, this will not bring any benefits. Vietnam cannot invent GDP calculation method, but it needs to calculate in accordance with the United Nations’ System of National Accounts (SNA), or internationally agreed standards.
Le Cong Nhuong, a National Assembly Deputy, also expressed his doubts about the GDP figure shown by GSO.
Nhuong said that Vietnamese income has improved significantly and the figure has exceeded the $2,600per head per annum threshold, but it still has not hit the $3,000 threshold.
Nhuong also thinks that GSO might have taken into account the value of the underground economy. If so, the GSO has arbitrarily applied additional norms which are not found in the UN’s statistics principles.
“GSP has to observe the calculation method set by the UN,” Nhuong said, adding that if Vietnam calculates GDP with another method, it won’t be able to compare Vietnam’s economy with others’ which are calculated in accordance with SNA.
Nhuong warned that if Vietnam counts the underground economy when calculating GDP, it will acknowledge the legality of activities prohibited by laws. This would have negative effects to the national economy and policy making.
Vietnam’s gross domestic product (GDP) grew 6.76 per cent in the first half of this year, the second highest rate since 2011.
The services sector in case of growing over 7.2% in 2019 could boost Vietnam’s GDP to be equivalent or even higher than last year's growth of 7.08%, according to the Ministry of Planning and Investment (MPI).