Vu Hong Thanh, head of the National Assembly’s Economic Committee, has expressed concern over the diminishing driving forces for the economy to maintain high growth of 6.6%-6.8% next year, news website VnEconomy reported.

A farmer is seen harvesting rice. Agriculture may not be a driving force for the economy next year

At a meeting of the committee today, October 9, to assess the country’s socioeconomic performance and the execution of the economic restructuring plan in the 2016-2020 period, Deputy Minister of Planning and Investment Nguyen Van Trung said strong supply and demand are the driving force of the economy this year.

Meanwhile, experts believed Samsung and steel manufacturers, such as Formosa, have contributed significantly to the nation’s economic growth.

Thanh said that the contributions of Samsung and Formosa to the country’s economic development next year may not be bigger than those in 2018. Besides this, while the agriculture sector posts a high growth rate of an estimated 3.31% this year, it will be unlikely to develop further next year.

Therefore, the driving force of the economy next year remains unclear.

Nevertheless, the Ministry of Planning and Investment is still upbeat about Vietnam’s economic outlook next year as the business environment has been ceaselessly reformed. Moreover, Vietnam, which is now a middle-income country, has prioritized global integration.

At the meeting, Deputy Minister Trung reported impressive achievements during the first three years of executing the economic restructuring plan.

The country has achieved all targets set by the National Assembly for this year to restructure the local economy. The macroeconomy has been stabilized, while annual inflation has been kept below 4% over the last three years.

In addition, the exchange rates and interest rates have been relatively stable, and the credit growth of 17% is reasonable. More than VND1,350 trillion (US$57.7 billion) has been paid to the State budget.

Regarding shortcomings, Trung noted that economic growth is more dependent on capital input rather than technology. Export growth is easily affected by external factors, and the foreign direct investment sector has made up a large proportion of the country’s total export revenue (over 70%).

He also highlighted the limited technology applications and the exhaustion of land and natural resources.

From next year, the country will have to fulfill its international commitments on opening its market, tax reductions and intellectual property protection, which will assist the country in attracting foreign investment but will put pressure on domestic enterprises as well.

Trung further listed some targets for next year, including gross domestic product (GDP) growth of 6.6%-6.8%, export revenue growth of 7%-8%, a trade deficit below 3%, total investment accounting for 33%-34% of the country’s GDP and inflation of some 4%.

According to the report by the Ministry of Planning and Investment, the number of workers aged 15 years and above may reach 55.9 million next year, up 1.97% over this year.

The State budget revenue was projected to hit VND1,400 trillion in 2019, a year-on-year increase of 7%. Meanwhile, budget overspending was estimated at VND222 trillion, equivalent to 3.6% of the country’s GDP.

IMF maintains economic growth forecasts for Vietnam

The International Monetary Fund (IMF), in its latest World Economic Outlook report, kept its forecasts for Vietnam’s GDP growth unchanged compared with its earlier projections, at 6.6% this year and 6.5% next year.

Vietnam’s inflation rate is expected to reach 3.8% this year and 4% next year. Meanwhile, the unemployment rate is likely to remain stable at 2.2% for the two years.

As for the ASEAN-5 economies, Indonesia, Malaysia, the Philippines, Thailand and Vietnam, GDP growth was projected at 5.3% in 2018 and 5.2% in 2019.

However, the IMF has revised down its global economic growth forecast to 3.7% from the earlier projected 3.9% due to trade conflicts and crises in emerging markets.

Saigon Times