The Ministry of Planning and Investment (MPI) lowered its estimate for Vietnam’s GDP growth to 6.58 percent in the first quarter of this year.

The Ministry of Planning and Investment (MPI) lowered its estimate for Vietnam’s GDP growth to 6.58 percent in the first quarter of this year. (Photo: vietnamnet.vn)

According to a report on the implementation of Government Resolution No. 1 and the socio-economic situation in the first two months of the year, the rate was below the level of the low growth scenario forecast in November last year.

In a low growth scenario, GDP this year was expected to increase by 6.6 percent, in which industry and construction, the key sector of the economy, must grow 8.75 percent, 8.91 percent and 7.63 percent in Q2, Q3, Q4, respectively, in order to reach an average of 8.26 percent for the whole year.

With this growth, the country’s GDP would be 6.55 percent, 6.89 percent and 6.4 percent in Q2, Q3 and Q4, respectively.

"To achieve the economic growth rate at the proposed low growth scenario, ministries, sectors and localities must make their utmost efforts and take advantage of every opportunity in the country and abroad,” the MPI said.

There needed to be a focus on implementing measures to promote production and business in the remaining quarters of 2019. The industry and construction sector must grow higher than the scenario.

As for the high growth scenario in which GDP in 2019 would increase 6.8 percent over the same period, the industry and construction sector must increase by 9.11 percent, 9.28 percent, 8.02 percent in Q2, Q3 and Q4, respectively, in order to reach an average of 8.57 percent for the whole year.

Accordingly, GDP in Q2, Q3 and Q4 would be 6.77 percent, 7.13 percent and 6.7 percent, respectively.

According to the MPI, Vietnam’s economy would continue to face many difficulties and challenges, including the risk of countries avoiding goods originating in Vietnam. In exports, a number of businesses had been found to fraudulently claim goods are of Vietnamese origin to avoid trade defence measures.

Supply chains were expected to change as the US-China trade war continues, which would also affect Vietnam’s economy.

The PMI report also showed institutional improvements, economic restructuring and transformation of the growth model had led to a strong transition, but challenges remained as the country’s economy integrated more deeply into the international arena.

New free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) demanded higher requirements and the full implementation of international commitments. Meanwhile, the country’s support industry development was not yet commensurate with the requirements to deeply participate in the global production network and value chain.

The MPI said support for Vietnam’s economic growth this year would mainly come from motivation in 2018 and comprehensive economic growth, an improved investment and business environment and the economy’s restructuring, adding new production capacities, expanding international trade activities and promoting the efficiency of the agricultural sector.

In a report issued by Virt Dragon Securities Corporation (VDSC), the GDP growth in Q1 was forecast to be lower than the same period last year.

According to VDSC experts, the Prime Minister’s request for the State Bank of Vietnam to control credit growth at a reasonable rate and focus lending on the Government’s priority areas would be important to boosting economic growth in the following quarters.

“Priority areas include agriculture businesses, firms producing goods for export, small- and medium-sized enterprises, enterprises operating in auxiliary industries and high-tech enterprises including start-ups,” the experts said.-VNS