GSO releases economic data on raft of indicators.
Vietnam’s economy grew at the strongest rate for five years in 2014, having ended the year on a healthy note as recovery became more entrenched. Official figures from the General Statistics Office (GSO) reported that the country’s GDP increased 5.06 per cent in the first quarter, 5.34 per cent in the second, and 6.07 per cent in the third, while the fourth quarter is estimated to see growth of 6.96 per cent.
Remarkable improvements in Vietnam’s economy were observed in 2014 compared with 2013, according to Mr. Michael Krakowski, Program Director and Chief Technical Advisor of GIZ Vietnam, who said that the higher the economic growth achieved the better the macroeconomic balance.
This positive outlook, he added, is largely reflected through the trade surplus, the surplus in international balance of payments, the considerable increase in foreign reserves, the relatively stable exchange rate, the lowest inflation rate for the last ten years, and improved employment.
There is consensus that curbing inflation to a safe level, at 4.09 per cent, was a major success for Vietnam. The trade sector also changed significantly, reflecting the year’s achievements and creating impetus for development in the future.
Export value reached $150 billion, a rise of 13.6 per cent over 2013, while import value stood at $148 billion, up 12.1 per cent. The trade surplus has been estimated at $2 billion, the highest since 2012 and helping to stabilize the exchange rate between the US dollar and the VND and balance foreign currency supply and demand in the local market.
Meanwhile, foreign direct investment (FDI) flows also showed positive signs. As at December 15 the country had 1,580 newly-licensed FDI projects with total registered capital of $15.64 billion, up 24.5 per cent in project numbers and 9.6 per cent in value year-on-year. FDI disbursement was estimated at $12.4 billion, a yearly rise of 7.4 per cent and 2.9 per cent higher than the target.
Regarding economic structure, the agro-forestry-fishery sector accounted for 18.12 per cent of the entire economy, industry and construction 38.5 per cent, and service 43.38 per cent in 2014, while the ratios in 2013 were 18.38, 38.31 and 43.31 per cent, respectively. “There has been optimism over the agricultural sector, with rice output increasing to 955,000 tonnes,” said Mr. Nguyen Bich Lam, General Director of GSO. “The seafood, construction and industrial sectors have also seen a strong growth while processing and mineral exploration industries also saw increases of 98 per cent and 2.5 per cent, respectively,” he said.
In 2014 Vietnam registered 74,842 new businesses with total registered capital of over VND432 trillion ($20.6 billion), down 2.7 per cent in number but increasing 8.4 per cent in capital. At the same time, 15,419 enterprises resumed operations, an increase of 7.1 per cent over the 2013 figure.
During the year the government took steps to overhaul the banking system and boost lending, with credit growth rising 12.6 per cent as at December 22. The State Bank of Vietnam said that it aims to maintain VND stability next year and pursue flexible monetary policies to boost expansion and curb price gains.
Despite 2014 being largely seen as a positive year for Vietnam’s economy, there remain difficulties and challenges, including local price vulnerability to unpredictable changes in the global situation, poor competitiveness in the context of global integration, and unresolved bad debts, especially those of State-owned enterprises.
For 2015 the government had submitted and the National Assembly (NA) has promulgated its socio-economic planning. Key indicators include GDP growth of 6.2 per cent, investment out of GDP of 30-32 per cent, inflation of 5 per cent, a budget deficit of 5 per cent of GDP, and a public debt ratio of less than 65 per cent of GDP.
These plans, analysts say, are appropriate and feasible. “With this 2015 economic development plan, Vietnam will likely not be able to achieve the objectives specified in the five-year plan for the 2011-2015 period,” said Mr. Krakowski.
Despite this, he believes that, as the economic growth pattern improves based on macroeconomic stability and a shifting development model towards quality and sustainability, Vietnam will have the conditions required to reach higher and more sustainable objectives in the upcoming five-year plan for 2016-2020 and can successfully implement its socio-economic development strategy towards 2020.
Mr. Howang Yu Nam, General Director of the Daewon Thuduc Housing Development JSC, said that Vietnam may have to overcome macro-economic challenges stemming from overseas in 2015. “The problem is the uncertainty in the global economy makes investors nervous and it will adversely affect investment in emerging countries,” he said. “Vietnam is one of the emerging countries where economic performance is heavily dependent upon foreign investments.”
He is optimistic, however, that Vietnam’s economy can overcome the challenges from problems overseas as its size is still at a level that can be controlled by the government, particularly with the experience gained from the economic slowdowns in the late 1990s and early 2000s and following the global financial crisis.