New Economic Signs Appear

Export growth was rather high: total export turnover in the six months was estimated at US$ 41.5 billion, increasing by 27.8 percent year on year and by three folds against the planned target passed by the Assembly. This made it clear that the low planned target did not reflect export growth. Export turnover in the foreign invested sector, excluding crude oil, was about US$19 billion, increasing by 28.1 percent. 

Turnover from export of many commodities in the past six months witnessed sharp increases: coffee with estimated increase of nearly 81 percent, rubber with nearly 96 percent (despite only 24.5 percent increase in quantity), and garment with increase of 30.3 percent. Many export goods were favoured with notable price increases. The Ministry of Industry and Trade also calculated that it was price increase alone that made national export turnover in six months increase by approximately US$2.7 billion. Import demand and soaring price in large markets made Vietnam enterprises’ exports move up so quickly: export to the US in the past six months increased by 22 percent, to the EU by 35 percent, to Japan by 23 percent and notably to China by over 40 percent.

However, import also soared too fast: in six months, national import was estimated US$ 49 billion, increasing by 26.4 percent year on year. As a result, the deficit came to US$7.5 billion, accounting for 18 percent of total export turnover, exceeding the government planned target (16 percent).

Consumer Price Index (CPI) flew up in the first months, but cooled down since May. The Ministry of Planning and Investment estimates the country’s CPI in June was much lower than the highest increase in April (3.32 percent) and in May (2.21 percent). Ministry of Planning and Investment forecast that CPI for the year will rise by 15 percent.

Also according to Ministry of Planning and Investment, the concentration on curbing inflation and stabilising the macro-economy influenced the economy’s growth in the first six months. GDP growth in the first six month was estimated only 5.6 percent (while in the first six months in 2010, GDP rose by 6.16 percent). The Agriculture, Forestry and Fishery sector only increased by 1.9 percent, while industry and construction rose by 6.6 percent, and service by 6.3 percent. Industrial production value in first six months was estimated at VND 419,000 billion, increasing by 14.2 percent year on year against 2010.

Total retail sales and turnover from consumer service in the first six months were estimated at VND914,000 billion, increasing by 22.8 percent year on year. In the first half, the country received three million international tourists, rising 17 percent against last year.

However, MPI also said the economy is still confronting great difficulties. Firstly, it is tightening monetary policy and increasing inter-bank interest rates, making it difficult for enterprises, especially small and medium ones, to borrow capital to expand their business and production. Secondly, the deficit tends to rise beyond the goal, while complex fluctuation in exchange rate and import goods’ price may impact the ability to improve balance of payments.

Finally, the Ministry supposed that inflation and the implementation of tightened monetary policy in many countries in the world continue to raise production input costs and prices of domestic consumer goods. These factors can “establish new price floor higher than the initial one, causing difficulties for curbing inflation, stabilizing market prices as well as expanding production and business,” assessed the Ministry of Planning and Investment.