What’s behind the high GDP growth rate?

The high GDP growth rate of 5.64 percent reported for H1, when a number of large cities and provinces were under social distancing, businesses had to close, and people lost their livelihoods, has puzzled many people.

What’s behind the high GDP growth rate?

The size of the economy has been revised based on a different calculation method, increasing by 25 percent in 2021 to VND9 quadrillion. With the 5.64 percent GDP growth rate in H1, the economy has had VND507.6 trillion more.

Vietnam’s GDP prior to the revision in 2020 was VND6.3 quadrillion. And in order to have VND507.6 trillion more in H1, the growth rate would be 8 percent. This is a record high growth rate rarely recorded in the previous strategic periods.

The figures show that the sudden revision of GDP, increasing by 25 percent, has posed concerns, not only to economists but also to country management. Many public financial figures, including public debt, government debt, foreign debt, local authorities’ debt, SOE (state owned enterprise) debt, private enterprises’ debt and overexpenditures all have relations with GDP.

The high GDP growth rate in H1 is encouraging but a question has been raised if such a high GDP truly reflects all the difficulties faced by people and enterprises in the Covid-19 crisis.

For example, the total budget collection in H1 was estimated at VND775 trillion, or 57.7 percent of the yearly estimates. Will the high growth rate and high budget collection prompt cities and provinces to come up with the idea of building monuments like Thanh Hoa, which is going ahead with the VND255 billion monument project?

As for the economic structure in H1, GSO (General Statistics Office) reported that the agriculture – forestry – fisheries sector accounted for 12.15 percent, while industry and construction was 37.61 percent, services 41.13 percent, and taxes less subsidies on products 9.11 percent. The figures were 14.16 percent, 33.51 percent, 41.99 percent and 10.34 percent, respectively, for the same period last year.

The high GDP growth rate of 5.64 percent reported for H1, when a number of large cities and provinces were under social distancing, businesses had to close, and people lost their livelihoods, has puzzled many people.

Nguyen Dinh Cung, a respected economist, former Head of the Central Institute of Economic Management (CIEM) said it was strange that the agriculture sector’s growth rate in H1 2021 was higher than in previous years, while construction and industry were lower. However, the proportion of agriculture decreased.

He said he wondered why the revised GDP of an increase of 25 percent did not lead to GDP structure changes. Is the adjusted figure equally divided among regions? If so, the adjusted figure is not real.

A lot of questions

 

According to GSO, in terms of GDP use in the first 6 months of this year, final consumption increased by 3.56 percent over the same period of 2020; asset accumulation increased by 5.67 percent; exports of goods and services increased by 24.05 percent; and imports of goods and services increased by 22.76 percent.

Cung commented that if based on GDP by consumption, there would not even be a growth rate of 5.64 percent, because consumption was lower than the same period last year and the accumulation was similar, and imports exceeded exports.

The transport and warehousing sector dropped by 0.39 percent, leading to a 0.02 percentage point decrease; and accommodation and catering services fell 5.02 percent and 0.12 percentage point. These sectors keep decreasing perhaps because the damages they have incurred are too serious.

One of the biggest concerns is inflation. However, GSO reported that “input material prices increased in accordance with world prices; and electricity and water prices increased in accordance with consumption demand, which were the major reasons behind the CPI increase of 0.19 percent in June over the previous month, the 1.62 percent increase over December 2020, and the 2.41 percent over June 2020.

The CPI increased by 1.47 percent on average in H1 compared with the same period last year, the lowest increase since 2016. The core inflation rate of H1 was 0.87 percent.

H1 inflation was attributed by GSO to input material price increases.

A high GDP growth rate is good news, but this has raised a lot of questions. 

Tu Giang

Stimulus sustained to ensure business performance revival

Stimulus sustained to ensure business performance revival

However, there has been no plan as yet to adjust the economic growth rate for the entire year, despite numerous difficulties ahead, with the speed of pandemic vaccinations in the country remaining slow.  

Vietnam welcomes third FDI wave

Vietnam welcomes third FDI wave

Vietnam is committed to developing its role in the production value chain through FDI and has been preparing for many years to improve the qualifications of its workers.

 
 

Other News

.
A breath of fresh air in literature textbooks for sixth graders
A breath of fresh air in literature textbooks for sixth graders
FEATUREicon  21/08/2021 

Teachers say sixth graders this year will be able to access literature works that their parents and grandparents did not have in their textbooks.

Highly contagious Delta variant lengthens outbreak in Vietnam
Highly contagious Delta variant lengthens outbreak in Vietnam
FEATUREicon  20/08/2021 

The Delta variant of the SARS-CoV-2 virus, with its rapid and strong spread in a very short time, has put huge pressure on the health system.

A midnight call from a pregnant woman, and return trips to hometowns
A midnight call from a pregnant woman, and return trips to hometowns
FEATUREicon  20/08/2021 

On the evening of August 15, Pham Thi Minh Hien, deputy director of the Phu Yen Department of Labor, War Invalids and Social Affairs, received a call for help from a young couple.

Joining forces with VietNamNet to stamp out the pandemic
Joining forces with VietNamNet to stamp out the pandemic
FEATUREicon  19/08/2021 

In order to make a contribution to the country’s fight against Covid-19, VietNamNet has launched the "Joining forces with VietNamNet to stamp out the pandemic" program.

After restructuring, banks gear up, ready for big deals
After restructuring, banks gear up, ready for big deals
FEATUREicon  19/08/2021 

After many years of undergoing restructuring, joint stock banks have expanded operation scale and profits.

Hanoi's anti-epidemic path
Hanoi's anti-epidemic path
FEATUREicon  18/08/2021 

Hanoi’s people and businesses will continue to live under social distancing because that is the "best way to live" with the virus when the vaccination rate is low to effectively contain the disease.

Ministry urges 'green' waterway passage for rice from Mekong Delta
Ministry urges 'green' waterway passage for rice from Mekong Delta
FEATUREicon  18/08/2021 

Most rice production and processing plants are located on riversides, and as a result, about 95 percent of rice produced in the Delta is carried by water.

The room that is always lit at field hospitals
The room that is always lit at field hospitals
FEATUREicon  19/08/2021 

At field hospitals, medical staff are not only constantly busy treating Covid-19 patients but are also overwhelmed with administrative papers.

Infrastructure ready for digital economy, society: Minister
Infrastructure ready for digital economy, society: Minister
FEATUREicon  18/08/2021 

Green and digital development is the main development trend in the first half of the 21st century.

Farmers face sharp drop in prices for fruit amid pandemic
Farmers face sharp drop in prices for fruit amid pandemic
FEATUREicon  20/08/2021 

Nearly all kinds of fruits, from custard apple to dragon fruit to durian, have seen prices plummet on low demand.

Online wholesale markets: solution for goods circulation
Online wholesale markets: solution for goods circulation
FEATUREicon  17/08/2021 

If there is a nationwide B2B wholesale trading floor for domestic agricultural products, the supply chain of agricultural products will not be disrupted, even in the time of an epidemic.

Unprecedented decisions made by of National Assembly, Government to fight Covid-19
Unprecedented decisions made by of National Assembly, Government to fight Covid-19
FEATUREicon  17/08/2021 

The urgent measures to fight the pandemic, if delayed even by one day only, could cause serious consequences, affecting people’s health and lives, Deputy Chair of the National Assembly’s Legal Committee Nguyen Phuong Thuy said.

How are Hanoians living during social distancing days?
How are Hanoians living during social distancing days?
FEATUREicon  18/08/2021 

Organizing birthday parties online, practicing exercise at home, and ordering food delivery are some of the ways Hanoians are adapting to new circumstances under social distancing.

Car sales drop, prices plummet
Car sales drop, prices plummet
FEATUREicon  17/08/2021 

Automobile manufacturers are facing sharp drop in sales and increased inventories as social distancing has been imposed in many cities and provinces, vehicle registration has been halted, and sale agents have had to close the doors.

'Vaccines' for the human spirit amid the Covid-19 pandemic
'Vaccines' for the human spirit amid the Covid-19 pandemic
FEATUREicon  20/08/2021 

Covid-19 is a serious trauma that affects the human psyche, making people susceptible to mental disorders such as depression, anxiety, and post-traumatic stress disorder, experts say.

Vietnam’s anti-corruption fight enters new stage
Vietnam’s anti-corruption fight enters new stage
FEATUREicon  14/08/2021 

However, fighting corruption is both an urgent and regular task throughout the development process. This is a non-stop struggle, demonstrating the bravery and determination of the Party and State against the vices of power.

Foreign music works are ‘Thach Sanh rice pot’ for Vietnamese singers
Foreign music works are ‘Thach Sanh rice pot’ for Vietnamese singers
FEATUREicon  16/08/2021 

Vietnamese singers may face copyright problems if they sing exclusive songs belonging to other singers, but it appears to be ‘safer’ when they sing international songs.

Foreign music works are ‘Thach Sanh rice pot’ for Vietnamese singers
Foreign music works are ‘Thach Sanh rice pot’ for Vietnamese singers
FEATUREicon  16/08/2021 

Vietnamese singers may face copyright problems if they sing exclusive songs belonging to other singers, but it appears to be ‘safer’ when they sing international songs.

Public administration learns to be cautious before making decisions
Public administration learns to be cautious before making decisions
FEATUREicon  15/08/2021 

The Hanoi People’s Committee has amended the regulation on travel permits during social distancing, and now people no longer have to get certification from ward or commune authorities.

Hanoi takes action to expand ‘green zones’
Hanoi takes action to expand ‘green zones’
FEATUREicon  14/08/2021 

Hanoi is determined to separate F0 cases from the community, thoroughly trace F1 (F0 contacts), localize and scale down ‘red zones’, and protect and expand ‘green zones’, gradually stopping the Covid-19 outbreak.

 
 
 
Leave your comment on an article

OR QUICK LOGIN