return icon Vietnamnet.vn

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.

{keywords}

 

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.

MORE NEWS

Da Nang hosts Western & Central Pacific Fisheries Commission’s regular session

The 19th regular session of the Western & Central Pacific Fisheries Commission (WCPFC) opened in the central city of Da Nang on November 28.

Ministry works to boost rail import-export volume to 5 million tonnes by 2030

The Ministry of Transport has submitted a plan to increase international freight transport by rail by 2030, with a target of shipping between 4 and 5 million tonnes.

PM holds telephone talks with French counterpart

Prime Minister Pham Minh Chinh on November 28 had a telephone conversation with his French counterpart Elisabeth Borne to seek ways to further strengthen the Vietnam-France strategic partnership, especially in economy, trade and investment.

Famous object designer presents art of assembling with Vietnamese lacquer

For the first time, Vietnamese people have a chance to see with their own eyes unique artworks by famous jewellery and object designer Gilles Jonemann that are on display at an exhibition in Hanoi.

Hanoi construction density from above

Many areas in Hanoi have seen high construction density with houses and high buildings due to rapid urbanisation.

Businesses in quandary due to credit limit

The long-term credit push to support the economy has a distorted capital flow.

VIETNAM NEWS HEADLINES NOVEMBER 28

National Assembly to hold extraordinary session in January 2023

Book tells journeys of Vietnamese immigrants to the UK in search of better lives

The life stories of Vietnamese migrants who are seeking better lives in the UK are vividly told in a new book.

Vietnamese movie honoured at France festival

“Tro tan ruc ro” (Glorious Ashes) by Bui Thac Chuyen won the "Golden balloon" award (Montgolfière d'or) at the Festival des 3 Continents 2022 which took place in Nantes, France, from November 18 – 27.

VIETNAM BUSINESS NEWS NOVEMBER 28

Gloomy outlook for exporters of aquatic products next year

Male model finishes fourth runner-up at Mister Grand International

Nguyen Vu Linh, Vietnamese representative at Mister Grand International 2022, was awarded the fourth runner-up title during the male pageant’s grand final held in Trinidad and Tobago on November 26.

Magnitude three earthquake hits northern border locality

An earthquake measuring three on the Richter scale jolted Ha Giang city in the northern border mountainous province of the same name on November 28.

Foreign fans congregate at Hanoi beer hub for 2022 World Cup

German and Spanish fans make their presence felt on backpackers street Ta Hien in Hanoi’s Old Quarter on November 28, supporting their respective countries at the ongoing 2022 FIFA World Cup underway in Qatar.

AI - the future of retail

Technology is changing the retail sector, with artificial intelligence (AI) shaping shopping centers and stores of the future.

Hanoi to celebrate New Year with drone light show and marathon

A countdown event, concert, drone light show and an international marathon will be held in Hanoi to celebrate the New Year 2023.
back_to_top