VINACHEM

HANOI - Despite signs of economic recovery pointed out in a couple of official reports in the first quarter of this year, experts have cast doubt on this optimism, saying the nation has yet to get out of the woods.

A report announced on March 25 by the Ministry of Planning and Investment said the nation’s gross domestic product (GDP) in January-March is up 4.94% against the same period of 2013, higher than last year’s 4.76%. Industrial production has expanded 5.2% in the first three months compared to 4.9% a year ago. Besides, the nation has got export sales of over US$33.3 billion, up 14.4% year-on-year, and spent US$32.3 billion on imports, a 12.4% increase.

Bui Ha, head of the general planning unit under the ministry, said no one has confirmed the nation has got out of stagnation but many believe that improvements have got clearer.

The consumer price index (CPI) in the first quarter is the lowest in 15 years but has risen 4.4% versus March 2013. The figure is still double the red limit of the European Union (EU), so Vietnam has yet to enter a deflation period.

Long said analysts have seen excessively high inflation in Vietnam, so they think about deflation whenever the CPI slows down. They were a little bit optimistic in the current context, Ha explained.

In addition, inventory has grown 13.4% in the first quarter while consumption has inched up 4.3%. As consumption is lower than a buildup of stock, it is too early to say that the situation has changed for the better.

“We make positive comments without paying attention to high stockpiles and the fact that poor consumption is the cause of a low CPI. If the situation keeps moving on, production will grind to a virtual halt,” he said.

Remarkably, some said the property market was recovering but real estate prices and housing indexes actually declined, Ha added.

Tran Dinh Thien, director of the Vietnam Institute of Economics, told the Daily that the quarterly GDP growth rate did not indicate the economy had bounced back. The worst is over but the economy is still facing a lot of challenges.

The fundamentals of growth remain weak. Many enterprises, even large ones, have almost gone bankrupt, he noted.

Bad debt has been dealt with, allowing enterprises to gain access to new loans but they are performing poorly. Therefore, Thien warned of risks in the future.

According to the Ministry of Planning and Investment, the nation has seen over 18,300 new firms set up in the first quarter with total registered capital of nearly VND98 trillion, up 17% and 23% year-on-year respectively. But there have been over 16,700 firms dissolved or forced to stop operations in the period.