Slowdown in economic figures challenges growth efforts
Updated : Thursday, June 07, 2018 9:29 AM (GMT+0700)

AlthoughVietnam’s economy maintained an uptrend in the first five months of 2018,growth rates in some industries have slowed down, making it difficult for thecountry to achieve this year’s targets.

Unloading goods containers at Cai Mep International Port in Ba Ria-Vung Tau province
- Photo: VNA

According to the GeneralStatistics Office (GSO), industrial production in May rose by 7.1 percent yearon year. Of which, mining contracted 7.6 percent while processing andmanufacturing increased 9.1 percent and electricity production and distributionexpanded 11.2 percent.

These rates are lower thanthe corresponding figures in April. Notably, the mining industry fell by afurther 2.6 percentage points and processing and manufacturing dropped 3.2percentage points. Only electricity production and distribution hiked 1.5percentage points due to an increase in power consumption in summer.

Between January and May,industrial production climbed 9.7 percent from a year earlier, higher than the6.6-percent growth in the same period last year. Processing and manufacturinggrew 11.8 percent, electricity production and distribution rose 10.6 percent,but mining declined by 2.2 percent. 

The GSO said althoughprocessing and manufacturing continued to post a fast growth pace, it hasslowed down, from 15.5 percent in January – February to 14.1 percent in January– March, 12.5 percent in January – April and 11.8 percent in the five months.

Meanwhile, food prices haverebounded, which will boost food production but also influence the consumerprice index (CPI), which is targeted at 4 percent at most in 2018.

The CPI in May grew 0.55percent from the previous month, the highest rate since 2012, 3.86 percent fromthe same period last year and 1.61 percent from last December.

Do Thi Ngoc, Director of theGSO’s Price Statistics Department, pointed out the surge in pork and animalfeed prices. The Price Management of the Ministry of Finance attributed the CPIhike partly to the increases of petrol and gas prices and grain food prices,which was boosted by stronger rice export demand.

On the other hand, GSO dataalso showed less positive signs for business activities. More than 11,000 newenterprises with registered capital of 104.8 trillion VND were set up in May,down 24 percent in the business number and 21.5 percent in capital from April.They registered 80,500 employees, down 24.5 percent.

The number of firms resumingoperations in May was more than 2,300, down 29.7 percent month on month.

A decrease was also recordedin foreign direct investment (FDI). This year to May 20, Vietnam granted newinvestment licenses to 1,076 FDI projects worth over 4.65 billion USD, up 14.6percent in the project number but down 16.8 percent in value. As many as 393existing projects registered to raise their capital by over 2.49 billion USD inthe five months, down 47.4 percent year on year.

New and additional FDIcapital in the period hit about 7.15 billion USD, an annual decline of 30.8percent.

Aside from theabovementioned factors, there remain problems in the economy, includinggrowth’s dependence on quantity instead of quality, low labour productivitycompared to many countries and the upward trend of CPI in the months to come.

Vietnam aims to achieveeconomic growth of at least 6.7 percent in 2018, the same target as 2017.

To reach this year’stargets, Minister of Industry and Trade Tran Tuan Anh stressed the necessityfor more support for businesses in processing and manufacturing, a coreindustry of the economy.

Meanwhile, Director of theGSO’s Industrial Statistics Department Pham Dinh Thuy called on industrialinvestment projects to be sped up to improve production capacity, services withhigh added value to be developed and domestic consumption stimulated.

Bui Quang Tin, CEO ofBizLight Business School, suggested monetary policy be more flexible to fuelproduction activities and keep the CPI stable.


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