Economy shows signs of losing momentum: expert
Updated : Thursday, August 09, 2018 3:15 PM (GMT+0700)

Vietnam’seconomy grew at a fast pace in the first half of 2018 compared to the previousyears, but there are indications that it is losing momentum – a problem notonly in the last half of the year but also in 2019 and 2020.

Containers are loaded at Tan Vu Port of Hai Phong Port in Hai Phong city - Photo: VNA

The remark was made by DangDuc Anh, head of the analysis and forecast section of the National Centre forSocio-economic Information and Forecast (NCIF), at a discussion in Hanoi onAugust 8.

The growth rate reached 7.45percent in the first quarter and 6.79 percent in the second quarter, but it ispredicted to slow down to 6.72 percent during July-September and 6.56 percentin the last three months. Meanwhile, average inflation is likely to be around 4– 4.2 percent, according to the NCIF.

Despite the 7.08-percentgrowth in the first six months, there are many challenges during the rest ofthe year, including pressure from the appreciation of the US dollar due to thepossibility that the US Federal Reserve could hike interest rates twice fromnow to the year’s end.

Resources for economicgrowth in the coming months are unclear while the processing and manufacturingindustry – a major driving force – is depending on FDI firms and still at a lowlevel in value chains. The driving force from the FDI sector, which is becomingsaturated in Vietnam, is also reducing. Additionally, effects of businessclimate improvement policies haven’t been clearly seen, he added.

Other challenges includeimpacts of the US-China trade war.

Echoing his view, otherexperts said the US-China trade tension could lead to a domino effect onVietnam’s economy. 

Tran Toan Thang, head of theNCIF’s world economy section, said the trade war, geopolitical risks and theUS’s taxation policy reforms will affect investment decision of multi-nationalAmerican companies. The reduction of corporate income tax in the US may alsotrigger a wave of tax cut or more investment incentives in some countries tokeep US businesses, which could impact the competitiveness of Vietnam’sinvestment environment.

To maintain the growthmomentum for the coming time, Vietnam should create a more transparentinvestment climate, improve technological capacity to attract more FDIcompanies, and actively respond to the US-China trade war’s impacts andexchange rate changes.

Meanwhile, Luu Bich Ho,former Director of the Vietnam Institute for Development Strategies at theMinistry of Planning and Investment, said the country needs to press on withdeveloping processing and manufacturing and pay more attention to seekingexport markets. 

He noted amid US-China tradetensions, it is necessary to prevent Chinese goods from taking advantage of theVietnamese market to falsify their origin to export to the US, or Vietnam couldbe taxed in a way China has been.


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