Vietnam posts strong Q2 growth
Hanoi (VNS/VNA) –
Vietnam’s economy maintained impressive growth in the second quarter this year,
according to a macroeconomic report released by the Vietnam Institute for
Economic and Policy Research (VEPR) in Hanoi on July 11.
The report showed that the economy in Q2 saw growth rate of 6.79 percent
year-on-year, the highest in ten years.
The agriculture, forestry, fishery and service sectors continued to improve sharply.
The industry and construction sector also grew at a high rate of 9.07 percent
in the first half of the year.
Manufacturing continued to drive the economy, while the mining industry fell
back to decline, reflecting the 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’s prudent monetary policy.
Trade growth slowed in the second quarter of this year; meanwhile trade balance
recorded a surplus in the fourth consecutive quarter and reached 1.4 billion USD
in Q2.
One noteworthy point in the VEPR study was that the number of temporarily
ceased enterprises was abnormally high, while the number of new jobs declined.
Speaking at the report announcement, economist Pham Chi Lan raised concerns
about the decrease in employment rate due to the remarkable rise of shuttered
firms. In other countries such as the US, Europe or Japan, the employment rate
was always a top priority, however, unemployment in Vietnam had not received
sufficient concern from authorities, she said.
VEPR’s statistics also showed that Vietnam’s budget balance returned to a
deficit in Q2, after a temporary surplus in Q1. Recurrent expenditures continued
to be higher than 70 percent of total expenditures, while development
investment expenditures had not improved much.
In the second quarter, the country’s total retail sales of goods and services
increased in value but declined in volume over the same period last year,
reflecting a recovery trend in prices in 2018.
The report said that investment growth in the private sector was strongest in
all economic sectors. Meanwhile, newly registered foreign direct investment
capital in Q2 reached a record level. Japan was the top investor in Vietnam the
first six months of 2018.
The liquidity of the system was abundant due to the higher deposit growth than
credit growth, coupled with foreign currency purchases by the SBV. Foreign
exchange reserves continued to rise, reaching 63.5 billion USD at the end of
Q2, the same level as the International Monetary Fund’s recommendation.
Another notable point from the report was that the real estate market in Q2
declined in both Hanoi and HCM City, both in new apartments for sale and
transactions.
Economist Pham The Anh attributed the gloomy real estate sector to some factors
such as the slow growth of the economy, instabilities in exchange rate,
consumer price index and the tension between the US and China.
“The potential risk of an increase in interest rates in the near future could
also push the real estate market down,” he said.
VEPR’s report forecast that this year’s GDP growth target might clock in at 6.8
percent, higher than the 6.5 to 6.7 percent goal set by the National Assembly,
as it forecast economic growth rates for the upcoming quarters to reach 6.65
and 6.55 percent, respectively.
The Vietnam Annual Economic Report, published by VEPR, is a series of annual
reports summarising major economic issues in the previous year, giving an
outlook for the coming year and providing policy recommendations.
The quarterly report was completed by the VEPR with support from the Konrad
Adenauer Stiftung.-VNS/VNA