Is Vietnam too cautious when setting economic development goals for 2020?
Many economic targets set for 2020 are lower in comparison with real implemented levels.
The resolution on the socio-economic development plan for 2020 was approved by the National Assembly last week, under which most of the targets set for 2020 are nearly the same with 2019.
In terms of overall goals, the National Assembly decided to focus on some major tasks such as stabilizing macro economy; controlling inflation; improving productivity, quality, efficiency, autonomy and competitiveness of the economy; improving the institutional regime; creating an equitable, open and favorable investment and business environment; and promoting the restructuring of the economy associated with innovating the growth model.
Regarding particular economic targets, the National Assembly decided that the GDP has to grow by 6.8 percent; the average consumer price increase (CPI) will be below 4 percent; the total export turnover will increase by about 7 percent; the trade deficit will account for less than 3 percent of total export turnover; and the total investment capital of the whole society will be 33-34 percent of GDP.
|The resolution on the socio-economic development plan for 2020 was approved by the National Assembly last week, under which most of the targets set for 2020 are nearly the same with 2019.|
These goals have raised controversy, because they are all below the levels implemented in recent years.
In its report released earlier this week, MSB Research Center raised a series of questions about the targets.
Why has the National Assembly decided that the GDP growth rate in 2020 would be at just 6.8 percent after Vietnam gained a high growth rate of 7.08 percent in 2018 and it can gain a growth rate of 6.8 percent in 2019?
Why does the National Assembly continue to set the goal of curbing the trade deficit at below 3 percent of total export turnover, though Vietnam has been gaining atrade surplus over the last four years?
Why does the National Assembly want to curb the inflation rate at below 4 percent, though the inflation rate can be below 3 percent?
Economists said the government has kept ‘necessary cautiousness’ when setting economic targets for 2020 in the context of unpredictable events of the global economy.
Regarding the targeted GDP growth rate of 6.8 percent, they said the growth rate is reasonable to ensure harmonization between GDP growth and inflation rates. If Vietnam makes every effort to obtain high GDP growth, it would have to pay for this with high inflation rate.
As for trade deficit, the economists said that the global trade still contains instabilities, while trade conflicts among countries appear to escalate and protectionism is arising.
Regarding export markets, four out of five major export markets of Vietnam, namely the EU, China, ASEAN and Japan, have been slowing down. Only the US market has witnessed high growth rate, but there are latent risks in trade fraud.
Vietnam is among the countries with the highest GDP growth rates in the region.
Vietnam’s public debt is projected to reach 54.3% of the country’s gross domestic product (GDP) by the end of 2020, before easing further to 53.3% in 2021 and 52.7% in 2022, according to the Ministry of Finance.