Vietnam's economic growth is forecast to stand at just 6 per cent while inflation may hit 5 per cent in 2016, said Dr Nguyen Duc Thanh, Director of theVietnam Institute for Economy and Policy Research (VEPR).
6.3- 6.5 per cent growth target is hard to reach
At a recent meeting of releasing the macroeconomic report for the third quarter of 2016 held by VEPR, Director Thanh said that Vietnam’s economy became more stable and developed more positively in the third quarter of 2016 than the previous periods in the year. GDP growth reached 6.4 per cent in the third quarter, lower than that in the corresponding period of previous years, bringing the nine-month growth to 5.93 per cent.
The General Statistics Office (GSO) attributed the slowing growth to agricultural shrinkage coupled with declining mining industries. Agriculture - a backbone economic sector which contributes 11- 13 per cent to the gross domestic product (GDP) - expanded by just 0.05 per cent in the first nine months and contributed only 0.01 percentage points to the GDP growth.
Forestry and fishery also declined slightly over the same period of 2015. In the first nine months, the agriculture, forestry and fisheries increased by only 0.65 per cent - the lowest growth in six years.
Dr Nguyen Duc Thanh said, after having enough data, the General Statistics Office calculated official growth data. According to a GSO report on socioeconomic performances in the first nine months, the value of agriculture, forestry and fisheries was almost unchanged from the earlier estimation. The nine-month breakdown in the latest five years proved this trend, specifically 3.95 per cent in 2011, 2.75 per cent in 2012, 2.38 per cent in 2013, 2.94 per cent in 2014 and 2.08 per cent in 2015.
However, figures extracted from revised GDP data showed big differentials (up 2.10 per cent in 2014 and down 1.27 per cent in 2015). Therefore, according to Dr Thanh, GSO is essentially more transparent with data it released, especially audited ones.
According to VEPR, Vietnam's economy recovered slightly from the first half of this year on positive processing and manufacturing performances. However, this gain was not enough to offset the decline of agriculture and extractive industries.
At the cabinet meeting for September 2016, the Government lowered the growth target to 6.3 - 6.5 per cent. According to VEPR researchers, given the current economy, Vietnam should follow the target of maintaining macroeconomic stability rather than focusing on growth. Experiences show that the fourth-quarter growth is usually higher than that in the third quarter but the differential does not exceed 1 percentage point, according to Thanh. The differential of 2 percentage points was seen in 2009 when the Government launched an enormous stimulus package to put a brake on economic decline. Therefore, VEPR researchers estimated that Vietnam’s economic growth was only 6 per cent in 2016.
Inflation may hit 5 per cent
According to VEPR, consumer price index (CPI) climbed significantly in the third quarter of 2016, especially in September when the new academic year started. September CPI gained 0.54 per cent and education contributed 0.42 percentage points.
In the third quarter, CPI rose 3.34 per cent from a year earlier while core inflation gained only 1.85 per cent. This showed impacts of price changes in State-managed commodities on general prices. Core inflation measures changes in the general price of the economy after excluding State-managed energy, food and public service factors.
Health and education service prices were revised up in the third quarter. The hike of health service prices in August and September pushed up price indices of these two items by 6.2 per cent and 7.7 per cent respectively over the second quarter. According to Decree No. 16/2015/ND-CP dated February 14, 2015 on self-financing of public service units, health service prices still need to be adjusted further to cover the full cost of wages and direct costs (excluding management cost and depreciation cost) at the end of 2016.
According to the VEPR report, based on economic developments as well as business performances of key economic groups, inflation may touch 5 per cent - the limit set by the National Assembly. Growth-affecting factors from now to the end of 2016 include crude oil price, which may be on the rise since the Organisation of Petroleum Exporting Countries (OPEC) reached an agreement on output reduction. As for basic commodities, despite a slight decline in the third quarter, the trend is still uncertain.
Si Son - VCCI News
