Government members express disbelief at rapidly improving economy.
On the afternoon of March 30, the Prime Minister chaired a meeting of the Board of Ministries to coordinate and manage macroeconomics in the first quarter of 2015.
According to the Prime Minister, earlier financial assumptions and forecasts are proving correct. The economy is gradually recovering and various markets are gaining more stability. A better than expected growth in GDP is the cornerstone of this belief.
GDP growth unexpectedly high
According to the report prepared for the meeting, GDP growth in the first quarter of 2015 is estimated at 6.03 per cent, higher than the same period last year of 5.06 per cent. Total retail and service consumption increased about 10 per cent, total investment increased around 9.1 per cent and export turnover rose about 6.9 per cent compared to the same period in 2014.
The Governor of the State Bank of Vietnam (SBV) expressed surprise at the growth stating that the rise above 6 per cent was due to the manufacturing and mining industries.
The Minister of Planning and Investment also expressed shock when he heard of the figures from the Director General of General Statistics Office of Vietnam. He explained that imports increased significantly along with a high volume of material from the manufacturing industry. The number of companies returning to doing business increased 12 per cent, a further contribution to the GDP growth.
Contention over electricity pricing
The Governor of SBV said the price of electricity should be raised 9.5 per cent instead of 7.5 per cent because even that figure would keep inflation below 5 per cent and the GDP around 6.2 per cent.
However, the Minister of Planning and Investment Bui Quang Vinh said that was "too optimistic". Mr.Vinh said that the increase of 7.5 per cent had already satisfied the basic needs of Vietnam Electricity, including allowing them to turn a profit.
In addition, Governor Binh assessed the impact of oil prices on Vietnam's economy. According to the scenario given if the price of oil was at $50-60/barrel or, worst case scenario, $40/barrel, the consumer price index (CPI) would be between 3 to 4.23 per cent and economic growth would remain at 6.2 per cent.
In this regard, the PM concluded that gas and electricity prices have been recently controlled in accordance to market principles. However, Ministries must observe them closely with regards to the global situation to manage policies appropriately and effectively.