At the workshop of the Vietnam Institute for Economic and Policy Research (Photo: VNA)Hanoi (VNS/VNA) –Vietnam’s economy maintained impressive growth in the second quarter this year,according to a macroeconomic report released by the Vietnam Institute forEconomic and Policy Research (VEPR) in Hanoi on July 11.
The report showed that the economy in Q2 saw growth rate of 6.79 percentyear-on-year, the highest in ten years.
The agriculture, forestry, fishery and service sectors continued to improve sharply.The industry and construction sector also grew at a high rate of 9.07 percentin the first half of the year.
Manufacturing continued to drive the economy, while the mining industry fellback to decline, reflecting the seasonal characteristic of the positive growthin Q1.
Inflation surged in Q2, reaching 4.67 percent at the end of June, due to risingfood and fuel prices. Meanwhile, core inflation remained at 1.37 percent,reflecting the SBV’s prudent monetary policy.
Trade growth slowed in the second quarter of this year; meanwhile trade balancerecorded a surplus in the fourth consecutive quarter and reached 1.4 billion USDin Q2.
One noteworthy point in the VEPR study was that the number of temporarilyceased enterprises was abnormally high, while the number of new jobs declined.
Speaking at the report announcement, economist Pham Chi Lan raised concernsabout the decrease in employment rate due to the remarkable rise of shutteredfirms. In other countries such as the US, Europe or Japan, the employment ratewas always a top priority, however, unemployment in Vietnam had not receivedsufficient concern from authorities, she said.
VEPR’s statistics also showed that Vietnam’s budget balance returned to adeficit in Q2, after a temporary surplus in Q1. Recurrent expenditures continuedto be higher than 70 percent of total expenditures, while developmentinvestment expenditures had not improved much.
In the second quarter, the country’s total retail sales of goods and servicesincreased in value but declined in volume over the same period last year,reflecting a recovery trend in prices in 2018.
The report said that investment growth in the private sector was strongest inall economic sectors. Meanwhile, newly registered foreign direct investmentcapital in Q2 reached a record level. Japan was the top investor in Vietnam thefirst six months of 2018.
The liquidity of the system was abundant due to the higher deposit growth thancredit growth, coupled with foreign currency purchases by the SBV. Foreignexchange reserves continued to rise, reaching 63.5 billion USD at the end ofQ2, the same level as the International Monetary Fund’s recommendation.
Another notable point from the report was that the real estate market in Q2declined in both Hanoi and HCM City, both in new apartments for sale andtransactions.
Economist Pham The Anh attributed the gloomy real estate sector to some factorssuch as the slow growth of the economy, instabilities in exchange rate,consumer price index and the tension between the US and China.
“The potential risk of an increase in interest rates in the near future couldalso push the real estate market down,” he said.
VEPR’s report forecast that this year’s GDP growth target might clock in at 6.8percent, higher than the 6.5 to 6.7 percent goal set by the National Assembly,as it forecast economic growth rates for the upcoming quarters to reach 6.65and 6.55 percent, respectively.
The Vietnam Annual Economic Report, published by VEPR, is a series of annualreports summarising major economic issues in the previous year, giving anoutlook for the coming year and providing policy recommendations.
The quarterly report was completed by the VEPR with support from the KonradAdenauer Stiftung.-VNS/VNA
