Vietnam to boost GDP growth rate in 2020Tuesday, January 28,2020
AsemconnectVietnam - Viet Nam’s GDP growth rate is expected to ease slightly in 2020, mainly due to a slowdown in the industrial sector, analysts from Fitch Solutions forecast.
The country’s GDP growth would reach 6.8 per cent from the 7.02 per cent posted in 2019.
Expectation for the growth rate of several economic sectors
The growth of the industrial sector will likely continue to slow this year after easing to 7.3 per cent in the last quarter of 2019, from 10.4 per cent in the third quarter.
“Transport and logistical infrastructure and human capital bottlenecks will continue to weigh on the sector's growth, which accounts for around 16.5 per cent of the Vietnamese economy,” Fitch said.
The US-China trade war has accelerated a structural shift in low-end electronics and textiles manufacturing out of China and into ASEAN, with Viet Nam being a major beneﬁciary. However, the rush to set up operations and export out of Viet Nam has put considerable stress on existing road and port infrastructure, resulting in severe congestion in and around major cities such as HCM City and Hanoi, and also week-long delays at ports. Indeed, export growth has decelerated since September 2019 and this trend is expected to persist over the coming months.
A shortage of qualiﬁed labour, as suggested by high year-on-year wage growth of between 12 per cent and 18 per cent across the occupational skill levels, will also weigh on manufacturing growth by inhibiting the integration of better technology into work processes.
Viet Nam’s manufacturing production growth slowed sharply to 6.5 per cent year-on-year in November 2019, its lowest level since 2017, from 10.8 per cent year-on-year in October 2019.
The agriculture sector will also be under pressure in 2020 due to hydroelectric dam projects upstream of the Mekong River in Laos, as well as diseases such as African swine fever.
However, it is expected that stronger growth in construction and services will partially offset the slowdown.
The construction of the North-South Highway, which began in September 2019 and is expected to be completed by 2021, will be a key project supporting the construction sector.
Meanwhile, services growth would be underpinned by four key sub-sectors, analysts said.
Firstly, a strong increase in real wages, in part driven by skills shortages, would support a continued rise of Viet Nam’s middle class.
This, together with the ongoing trend of robust tourist arrivals, boded well for further strengthening in retail as well as hospitality services. Retail sales growth had been relatively stable above 10 per cent over the past three years, growing by an average of 11.7 per cent year-on-year.
Next, the inﬂux of companies to Viet Nam to circumvent US tariffs on China would also support the growth of transport and warehousing services, especially with a shortage of such services likely to push up prices and proﬁtability in this sub-sector.
Finally, despite a likely (slight) softening of economic growth in 2020, still-robust economic activity would continue to support growth of financial services.
Vietnam to boost economic growth in 2020
Vietnam will work hard during the early days of 2020 to achieve this year’s socio-economic tasks and the targets set for the 2016-2020 period in the Party resolution.
Vietnam aims to continue to strengthen its macro-economy, control inflation, and increase the productivity, quality, efficiency, self-reliance, and competitiveness of the national economy. Vietnam plans to boost reform, fine-tune institutions, mobilize more resources, and improve its investment environment.
Vietnam obtained impressive economic breakthroughs in 2019, achieving a GDP growth rate of 7.02%, among the highest in the world. This was the second year that Vietnam has achieved a GDP growth rate of more than 7%. Vietnam’s macro-economy was stable last year and its CPI was kept within the limit set by the National Assembly.
Most notably, Vietnam’s exports earned 500 billion USD, two years after recording 400 billion USD. Vietnam enjoyed export surplus for 4 consecutive years. These achievements are particularly impressive given the downward trends in many countries.
In 2019 Vietnam’s economy had to overcome negative effects from the global economy as well as natural disasters, typhoons, droughts, and epidemics. African swine fever damaged Vietnam’s livestock production, exports of agricultural products faced more demanding market requirements.
But Vietnam managed to increase agricultural exports and even surpassed set targets.
Speaking at a recent government-locality teleconference, Party leader and President Nguyen Phu Trong highlighted Vietnam’s major achievements in 2019 which far-surpassed 2018 and said Vietnam’s prospects have become more promising than ever during the last 50 years of implementing President Ho Chi Minh’s
2020 goals to be realized
2020 will be a decisive year for Vietnam to realize the goals and targets set at the 12th National Party Congress. Party leader and President Nguyen Phu Trong and Prime Minister Nguyen Xuan Phuc urged Vietnam to work harder and promote dynamism and creativity to realize the Resolution of the 12th Party Congress.
With a special focus on boosting economic growth, Vietnam will continue to strengthen the macro-economy, control inflation, and promote internal strength and self-reliance. The government will further improve the business environment, promote rapid, sustainable economic growth, and increase the competitiveness of the national economy.
Vietnam aims to create breakthroughs by taking advantage of the 4th Industrial Revolution, and promote a sharing economy, smart finance, e-commerce, and innovative startups.
During the first few days of 2020, the government issued two major resolutions on accomplishing the socio-economic and budget tasks of the year, and on improving Vietnam’s business environment.
Source: VITIC/VOV.VN/ VNS
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