VINACHEM

Local and international economic experts said on June 27 the country would find it hard to meet the gross domestic product (GDP) growth target of 6.7% this year as the first quarter saw modest growth.

According to the World Bank (WB), the economy of Vietnam may expand 6.3% at best this year. However, there are positive developments; low inflation is under control while the business environment, foreign exchange rates, credit, overseas remittances and the balance of payments have improved.

Speaking at the Vietnam Economic Forum 2017 organized in Hanoi on June 27 by the Central Party Committee’s Economic Commission, Nguyen Xuan Thanh, director of Campus Development at Fulbright University Vietnam (FUV), said the 5.1% growth in the first quarter was a surprise.

At the end of 2016, the economy was expected to perform better this year. Therefore, the Government is facing huge pressure because GDP growth in the first two years of its current five-year tenure was lower than the final year of the previous term of the Government, Thanh noted.

In late 2015, the Government expected GDP growth of 6.7% in 2016 but the actual outcome was 6.21%. At the end of last year, the Government stuck with its 6.7% target for 2017.

However, with 5.1% growth in the first three months of this year, the Government must make effort to ensure that GDP will grow 7% in each of the remaining quarters. Policymakers, foreign and local experts have viewed the figure as too high to achieve, Thanh said.

According to him, this year’s GDP expansion is expected at 6.3-6.4% only. The slow restructuring of the banking system and State-owned enterprises, lower-than-expected public investments and high public debts are to blame for dampened GDP growth.

Stubbornly high bad debts at local banks are weighing on the economy, thus causing a big dent to GDP growth. Public investments are seen as an effective vehicle for bolstering economic growth but they are running dry. Therefore, the Government should resort to capital from the equitization of State-run enterprises and the divestment of State stakes at enterprises to maintain a high level of public investment in the short term without breaking the public debt limit, Thanh added.

However, Deputy Minister of Planning and Investment Dang Huy Dong told the forum that the Government was confident in the 6.7% growth target.

Economic growth in the first half is estimated at 5.5-5.7%, almost equivalent to the level the Prime Minister assigned to industries. The Government has seen initial positive factors which can help attain 6.7% growth in 2017, Dong said. - SGT-