Vietnam posts strong Q2 growth
Updated : Thursday, July 12, 2018 3:23 PM (GMT+0700)

Vietnam’seconomy maintained impressive growth in the second quarter this year, accordingto a macroeconomic report released by the Vietnam Institute for Economic andPolicy Research (VEPR) in Hanoi on July 11.

 
At the workshop of the Vietnam Institute for Economic and Policy Research - Photo: VNA

The report showed that theeconomy in Q2 saw growth rate of 6.79 percent year-on-year, the highest in tenyears.

The agriculture, forestry,fishery and service sectors continued to improve sharply. The industry andconstruction sector also grew at a high rate of 9.07 percent in the first halfof the year.

Manufacturing continued todrive the economy, while the mining industry fell back to decline, reflectingthe seasonal characteristic of the positive growth in Q1.

Inflation surged in Q2,reaching 4.67 percent at the end of June, due to rising food and fuel prices.Meanwhile, core inflation remained at 1.37 percent, reflecting the SBV’sprudent monetary policy.

Trade growth slowed in thesecond quarter of this year; meanwhile trade balance recorded a surplus in thefourth consecutive quarter and reached 1.4 billion USD in Q2. 

One noteworthy point in theVEPR study was that the number of temporarily ceased enterprises was abnormallyhigh, while the number of new jobs declined.

Speaking at the reportannouncement, economist Pham Chi Lan raised concerns about the decrease inemployment rate due to the remarkable rise of shuttered firms. In othercountries such as the US, Europe or Japan, the employment rate was always a toppriority, however, unemployment in Vietnam had not received sufficient concernfrom authorities, she said.

VEPR’s statistics alsoshowed that Vietnam’s budget balance returned to a deficit in Q2, after atemporary surplus in Q1. Recurrent expenditures continued to be higher than 70percent of total expenditures, while development investment expenditures hadnot improved much.

In the second quarter, thecountry’s total retail sales of goods and services increased in value butdeclined in volume over the same period last year, reflecting a recovery trendin prices in 2018.

The report said thatinvestment growth in the private sector was strongest in all economic sectors.Meanwhile, newly registered foreign direct investment capital in Q2 reached arecord level. Japan was the top investor in Vietnam the first six months of 2018.

The liquidity of the systemwas abundant due to the higher deposit growth than credit growth, coupled withforeign currency purchases by the SBV. Foreign exchange reserves continued torise, reaching 63.5 billion USD at the end of Q2, the same level as theInternational Monetary Fund’s recommendation.

Another notable point fromthe report was that the real estate market in Q2 declined in both Hanoi and HCMCity, both in new apartments for sale and transactions.

Economist Pham The Anhattributed the gloomy real estate sector to some factors such as the slowgrowth of the economy, instabilities in exchange rate, consumer price index andthe tension between the US and China.

“The potential risk of anincrease in interest rates in the near future could also push the real estatemarket down”, he said.

VEPR’s report forecast thatthis year’s GDP growth target might clock in at 6.8 percent, higher than the6.5 to 6.7 percent goal set by the National Assembly, as it forecast economic growthrates for the upcoming quarters to reach 6.65 and 6.55 percent, respectively.

The Vietnam Annual EconomicReport, published by VEPR, is a series of annual reports summarising majoreconomic issues in the previous year, giving an outlook for the coming year andproviding policy recommendations.

The quarterly report wascompleted by the VEPR with support from the Konrad Adenauer Stiftung.

Source:VNS/VNA

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