Containers are loaded at Tan Vu Port of Hai Phong Port in Hai Phong city (Photo: VNA)Hanoi (VNA) – Vietnam’s economy grew ata fast pace in the first half of 2018 compared to the previous years, but thereare indications that it is losing momentum – a problem not only in the lasthalf of the year but also in 2019 and 2020.
The remark was made by Dang Duc Anh, head of theanalysis and forecast section of the National Centre for Socio-economicInformation and Forecast (NCIF), at a discussion in Hanoi on August 8.
The growth rate reached 7.45 percent in thefirst quarter and 6.79 percent in the second quarter, but it is predicted toslow down to 6.72 percent during July-September and 6.56 percent in the lastthree months. Meanwhile, average inflation is likely to be around 4 – 4.2percent, according to the NCIF.
Despite the 7.08-percent growth in the first sixmonths, there are many challenges during the rest of the year, includingpressure from the appreciation of the US dollar due to the possibility that theUS Federal Reserve could hike interest rates twice from now to the year’s end.
Resources for economic growth in the comingmonths are unclear while the processing and manufacturing industry – a majordriving force – is depending on FDI firms and still at a low level in valuechains. The driving force from the FDI sector, which is becoming saturated inVietnam, is also reducing. Additionally, effects of business climateimprovement policies haven’t been clearly seen, he added.
Other challenges include impacts of the US-Chinatrade war.
[New momentum for economic growth needed: PM]
Echoing his view, other experts said the US-Chinatrade tension could lead to a domino effect on Vietnam’s economy.
Tran Toan Thang, head of the NCIF’s worldeconomy section, said the trade war, geopolitical risks and the US’s taxationpolicy reforms will affect investment decision of multi-national Americancompanies. The reduction of corporate income tax in the US may also trigger awave of tax cut or more investment incentives in some countries to keep USbusinesses, which could impact the competitiveness of Vietnam’s investmentenvironment.
To maintain the growth momentum for the comingtime, Vietnam should create a more transparent investment climate, improvetechnological capacity to attract more FDI companies, and actively respond tothe US-China trade war’s impacts and exchange rate changes.
Meanwhile, Luu Bich Ho, former Director of theVietnam Institute for Development Strategies at the Ministry of Planning andInvestment, said the country needs to press on with developing processing andmanufacturing and pay more attention to seeking export markets.
He noted amid US-China trade tensions, it isnecessary to prevent Chinese goods from taking advantage of the Vietnamesemarket to falsify their origin to export to the US, or Vietnam could be taxedin a way China has been. –VNA
VNA
