VINACHEM

Vietnam’s first-quarter gross domestic product (GDP) growth is lower than in the same period last year as severe drought, salinity intrusion and the lower-than-expected performance of major sectors bite.

Data of the General Statistics Office (GSO) released last Friday showed GDP has expanded by 5.46% in the first quarter of this year, well below 6.12% in the same period last year.

The economy has shown signs of slowing down, according to the GSO. It has only performed better than in the January-March period of 2012, 2013 and 2014 when the economy was in distress.

Drought hits agriculture

The GSO calculated the agricultural sector has in the year to March contracted by 2.69% year-on-year despite increases of 6.24% and 2.12% in the forestry and seafood segments in the period. The added value of agro-aqua-forestry products has fallen by 1.23% from a year earlier.

Paddy output in the Mekong Delta is forecast to shrink 6.2%, or 700,000 tons, compared to the same period last year due to drought and salinity which have wreaked havoc on the region, while yields of the winter-spring crop in the northern region are low.

Complicated developments of the calamity in the Mekong Delta, the nation’s key rice growing area, and drought in the central and Central Highlands regions have affected production and people’s lives.

The El Nino phenomenon has aggravated drought and salinity intrusion in different parts of Vietnam since last year. By March 18, salinity had inflicted damage on the Mekong Delta and eight of the delta’s 13 provinces had declared a state of calamity.

Salinity intrusion is forecast to continue in the Mekong Delta until May when the dry season peaks in the region.

In the south-central region, drought has sent water levels in reservoirs ebbing to new lows and damaged around 23,000 hectares of rice, with 15,400 hectares in Binh Thuan Province, 5,800 hectares in Ninh Thuan Province and 1,800 hectares in Khanh Hoa Province.

Meanwhile, at least 2,900 hectares of crops in the Central Highlands and southeastern regions has dried up due to drought, with 2,650 hectares in Gia Lai Province and 215 hectares in Dak Nong Province.

According to preliminary assessments, increasingly severe drought and high levels of saltwater have taken a heavy toll on 172,600 hectares of rice, 8,000 hectares of other crops, 41,500 hectares of orchards and 3,500 hectares of fish and shrimp, as well as 426,000 households.

In the north, natural disasters including protracted cold spells and whirlwinds in the first three months of 2016 have damaged 20,800 hectares of crops and 1,500 hectares of fish, as well as killed 16,500 cattle and 7,500 poultry.

Total losses in the period are estimated at nearly VND1 trillion, including VND313 billion reported for Thanh Hoa Province, VND236 billion for Yen Bai Province, VND180 billion for Thai Binh Province and VND80 billion for Lao Cai Province.

So far, the Government has allocated more than VND600 billion (over US$26.75 million) to provinces to ease the impact of drought and salinity on agriculture and people.

Speaking at a monthly cabinet meeting in Hanoi last week, Prime Minister Nguyen Tan Dung told relevant ministries and agencies to do whatever they could to remove hindrances to the agricultural, manufacturing and service sectors, with special attention paid to the agricultural sector.

They were told to quickly adopt measures to deal with salinity in the Mekong Delta and drought in the central and Central Highlands regions in order to minimize damage and stabilize production for farmers.

They should ensure enough clean water supply for millions of people in the affected provinces, speed up construction of irrigation and salinity control works, find ways to use water efficiently and plant suitable crops.

The committee requested the Government to clarify responsibilities, handle violations and maintain financial discipline.

In a report sent to the NA, the Government said total budget spending in the 2011-2015 period doubled that in the previous five years.

Of the budget spending in 2011-2015, regular expenditures made up 64-65%, up from 55.2% in the 2006-2010 period. Meanwhile, development investments slid from 30.6% of the budget spending in the 2001-2005 period to 28.2% in the 2006-2010 period and 23.6% in the following five years.

As explained by the Government, it was difficult to strike a budget balance in 2011-2015 due to unfavorable developments at home and abroad. Meanwhile, spending needs were huge and led budget deficit to rise higher than approved by the NA.

As of late last year, the ratios of public debt, government debt and foreign debt to GDP were 62.2%, 50.3% and 43.1% respectively.

Other sectors see slower growth

According to the GSO, the added value of the manufacturing and construction sectors from January to March has edged up 6.72% year-on-year, higher than that of 2013 and 2014 but lower than the rise of 8.74% in the first quarter of last year.

Industrial growth in quarter one stands at 6.2%, far below 9.27% in the January-March period of 2015, as a number of sectors have performed lower than expected, including the processing sector.

The service sector has grown by 6.13% in the year to March, the highest since the first quarter of 2012. However, sales have gone up by 6.87%, lower than 8.67% in the first three months of last year.

Data of the GSO indicated that goods exports have gained a modest increase of 4.1% and crude oil shipments, which contribute much to the State budget, have plunged by 52.8% year-on-year due to the world’s low oil price in the period.

Merchandise imports have dipped by 4.8% from the year-earlier period, with declines of 5.7% for foreign-invested companies and 3.5% for domestic enterprises. Spending on machine and equipment imports has slid by 14% and fuels by 41.6%.

However, the three-month period has seen the construction sector expanding by 9.94%, the highest since 2010, with industrial production growth of more than 23% in non-State companies and 11% in State-owned enterprises.