Vietnam’s Ministry of Planning and Investment (MPI) has revised down the GDP growth forecast for the first quarter (Q1) of 2019 to 6.58%, down from its previous projection of 6.76% in its most adverse scenario developed last November, according to the ministry's latest report. 

MPI's two scenarios of GDP growth in 2019. Source: MPI.

The figure indicated a more cautious approach of the MPI in evaluating the economic outlook, factoring in the less-than-expected growth rate of some major economic indicators.

These included the 9.2% increase of the index of industrial production in the first two months of 2019, lower than the 13.7% growth rate recorded in the same period last year, while the number of newly established enterprises was down 14.6% year-on-year. 

Nevertheless, the MPI remained optimistic about Vietnam’s GDP growth target of 6.6% - 6.8% for 2019, depending on each scenario, in which the subsequent quarters would have higher growth rates compared to Q1/2019, except Q4/2019. 

However, it would mean higher pressure for growth from Q2 onwards and growing significance of growth engines. 

Nguyen Bich Lam, head of the General Statistics Office, said in addition to industrial production, Vietnam’s economic development relies on other foundations such as consumer spending, favorable business and investment environments and free trade agreements. 

These factors would help Vietnam mobilize social resources for greater production capacity of the economy, Lam added. 

Moreover, it is important for Vietnam to look for new export markets for its export staples, including footwear, textile and garment, fisheries in the context of US – China trade friction. 

In 2019, international organizations forecast a slowdown in global economic growth, which poses a challenge to Vietnam’s economy with the trade-turnover-to-GDP of 200% of GDP. However, Vietnam’s extensive effort of global integration would help the country maintain the economy’s high growth rate, Lam stated. 

Minister of Planning and Investment Nguyen Chi Dung said Vietnam’s growth engines must come from the institutional reform, in which enterprises and citizens are at its very center. 

According to Dung, the ultimate goal of the reform process would be for the benefit of citizens and enterprises. He added that state governance must be improved towards transparency and simplification. 

As the Fourth Industrial Revolution is fast approaching, state governance must be closely related to digital transformation for a healthy development of business environment benefitting all economic components. 

Hanoitimes