In the first quarter of 2015, GDP increased by 6.03 percent. This is surprising even to Cabinet members, as experts of the government consultative group estimated at their recent meeting a growth rate of 5.5-5.6 percent.
Production regaining growth rate
According to General Statistics Office, GDP of Vietnam in the first quarter of 2015 increased 6.03 percent against 5.06 percent in the same period of 2014 and the highest ever since 2008.
The industry and construction sector increased with a growth rate of 8.35 percent, service sector increased 5.82 percent and agriculture-forestry-fisheries increased 2.14 percent, compared to the same period last year.
Some industries recorded high growth rates such as electricity, gas and air conditioning increased 11.9 percent, manufacturing 9.51 percent, water supply and treatment 7.4 percent.
The GDP growth rate in March was the focalpoint of the discussion at the government meeting on April 1with the conclusion of Prime Minister Nguyen Tan Dung that 6.03 percent increase of GDP in Quarter 1 2015 is real figure. He said: “This is the highest figure of the same period in the past five years, mainly due to the increase in industry, especially in processing and manufacturing.”
The increase of GDP growth is even more impressive as inflation is at a low level and the macro economy remains stable. The low increase in CPI while reducing pressure on living conditions of the people as well as input of businesses has boosted production and business activities. Industry, especially processing and manufacturing, recorded a high growth rate while agriculture remains stable.
The report at the government meeting shows that the macro economy in the first quarter of 2015 remains stable and improving, while budget revenue ensured in spite of the low price of oil in the world. Retail sale and service increased 10 percent, together with 9.1 percent in total social investment and 6.9 percent in export value.
Though GDP figures were unexpected, many positive factors in the first quarter have in fact ensured the growth, especially in manufacturing industries, mining, gas and oil. Without these factors, GDP growth would be around 5.6 percent.
According to Minister of Planning and Investment Bui Quang Vinh, the recent sharp increase in import is mainly due to production demand with 80 percent in equipment and machines. Even the increase in automobile import, it is the increase in trucks for transportation of materials for construction, not sedans. Meanwhile the number of enterprises resuming their activities increased over 12 percent contributing to GDP growth in the first quarter.
Beware of inflation in second quarter
With better achievements in first quarter, industrial production was doubled, consumption demand resumed and enterprises received higher orders. The forecasts for second quarter remain stable with low inflation rate and GDP growth rate higher than the same period last year.
However, there remain unfavourable factors such as low growth of the world economy and low product prices which may affect growth and export, while oil price may continue to fluctuate.
According the forecasts of inter-ministerial group on macro economy management, the prices of electricity and oil in the first quarter may effect the inflation in second quarter and even following quarters. The recent increase in the price of electricity and oil will increase 0.8 percent in second quarter and 0.84 percent in CPI of the remaining 6 months.
With the GDP growth rate in first quarter, it is too early to assert the high growth rate of Vietnamese economy. As forecast, low growth rate of the world economy and decline in prices may affect growth and export. The oil price continues to cause trouble. Though with some improvement in Vietnamese economy, according to a recent ADB report: in short term Vietnam should accelerate the strengthening of the banking system. The improvement of economic growth in the long term will depend more on structural reform, especially in supporting domestic businesses integrating into global value chains.
Bao Chau
Vietnamese
