Hanoi (VNA) – With a gross domestic product (GDP) expansion of 7.31 percent in the third quarter, the growth target of 6.6 – 6.8 percent for 2019 set by the National Assembly is achievable and likely to reach 7.05 percent, according to the Vietnam Institute for Economic and Policy Research (VEPR).

This is part of an assessment of the country’s macro-economic performance in Q3 unveiled by the VEPR on October 10.

The report cited experts as saying that although the global economy has witnessed a growth downturn in Q3, Vietnam still recorded an economic expansion of 7.31 percent thanks to stable business activities in the retail and service sectors. Therefore, despite the slow increase in the State sector’s investment capital, the foreign direct investment sector continued to post growth and had a high rate of capital disbursed. As a result, trade remained balanced in the first nine months of the year.

The assessment also pointed out a highlight of Q3 which was the average inflation of 2.23 percent, which kept the consumer price index (CPI) between January and September at 2.5 percent.

However, VEPR Chief Economist Dr Pham The Anh said inflation control should not be underestimated as there are many potential risks such as food price vagaries caused by diseases, price hikes in educational services, and fluctuating energy prices.

Over the past nine months, the service sector grew 6.85 percent year on year, agro-forestry-fisheries 2.02 percent, and industry – construction 9.56 percent.

In addition, the industrial production index rose 9.6 percent while the index of industrial shipment of manufacturing was also positive, up 9.5 percent. Notably, the average index of industrial inventory maintained the fast pace since 2018, by 17.2 percent from the same period last year.

Economic growth rate likely to surpass 7 percent this year hinh anh 1There were 35,316 newly established businesses with the total registered capital of 430.6 trillion VND in Q3 (Photo: VietnamPlus)

In the world, trade tensions between the United States and China, as well as between Japan and the Republic of Korea, have been affecting supply chains, the value of strong currencies and asset markets. Hence, many big economies have been moving to cut down interest rates to stimulate growth.

In Vietnam, inter-bank interest rates have been falling sharply following the State Bank’s reduction of the regulatory interest rate.

Economic growth rate likely to surpass 7 percent this year hinh anh 2

Experts said the fact that Vietnam became one of the seven biggest partners exporting to the US has helped the Southeast Asian nation raise its foreign exchange reserves to over 71 billion USD. Nonetheless, they also recommended the central bank be prudent and steer the monetary policy in a flexible and objective manner.

Besides, the country should focus on reforming the fiscal, monetary and exchange rate policies so as to cope with global economic uncertainties. Particularly, it should regulate exchange rates flexibly and keep interest rates stable, experts said in the report.

[Nine-month export revenue picks up 8.2 percent]

Foreign economists are also optimistic about Vietnam’s GDP growth.

According to Bloomberg, economists are upgrading their growth projections for Vietnam after the latest data showed the economy surged more than 7 percent in Q3.

Citigroup Inc. revised its full-year forecast of Vietnam’s GDP to 6.9 percent from 6.7 percent, on the basis of another solid performance in the fourth quarter.

Analysts at Maybank Kim Eng Research Ltd. also lifted their forecast of the country’s economic expansion to 7 percent from their previous prediction of 6.8 percent.

Meanwhile, United Overseas Bank Ltd. changed to 6.8 percent for the year from 6.7 percent, and Capital Economics Ltd. kept their projection of 7 percent, Bloomberg said.

Solid exports and manufacturing growth enabled the third-quarter gain of 7.31 percent. The expansion was the highest since the start of last year, and reflects growing foreign investment into Vietnam.

According to two economists of Maybank – Linda Liu and Chua Hak Bin, rising foreign direct investment and “buoyant domestic demand, as suggested by the recent robust retail sales growth”, will keep the momentum going through the year-end and in early 2020.

Currently, many international financial institutions are issuing very positive assessments about the prospects of Vietnam's economy in the coming time.

HSBC predicts that inflation in Vietnam will be kept below 2.7 percent, while GDP growth is expected to ease to 6.7 percent in the whole year.

Edward Lee, chief economist for ASEAN and South Asia at Standard Chartered Bank Global Research, said he believes that Vietnam will be the fastest growing economy in ASEAN this year with a projected growth reaching 6.9 percent, and this is expected to continue until 2021./.