The country’s macroeconomic situation is forecast to be in continued difficulty in the last six months of the year. But, there are still signs of stronger growth if Vietnam has appropriate measures to boost up production and stimulate domestic consumption.
The second quarter growth of 5.57 per cent slowed the first-half growth to 5.52 per cent. According to many experts, the growth target of 6.7 per cent in 2016 is unachievable. However, Mr Nguyen Dinh Cung, Chairman of Central Institute for Economic Management (CIEM), appreciated the efforts of the Government of Vietnam when it reaffirmed to place priority on macroeconomic stability, and facilitate microeconomic reform to speed up economic growth to the right track.
The Government’s efforts will bring higher economic growth in the third quarter of 2016, estimated at 6.14 per cent by CIEM experts. Exports are forecast to expand 6.8 per cent; trade deficit will narrow to US$400 million; and the consumer price index (PCI) will climb 1.31 per cent.
“Socioeconomic development objectives are not adjusted even though developments worsened than expected at the beginning of 2016. More importantly, the Prime Minister steadfastly braced this direction, thus helping maintain and strengthen macroeconomic policies to respond to adverse developments while focusing on handling issues more fundamental to medium- and long-term economic growth momentums,” he said.
Agreeing with Mr Cung, Prof Nguyen Quang Thai appreciated expectations for the high effect of government-enabling development model adopted by the Government. He added that Vietnam should not care too much about the growth target but put its efforts for macroeconomic stability and address existing issues relating to public investment and public debt, create an enabling economic environment for a developing and integrating economy.
On favourable factors, policy effects and troubleshooting measures from the Government and the Prime Minister will be translated into reality and positively impact domestic production and consumption. Lending rates may be more probable to decline on the currently abundant liquidity of the banking system and higher credit demands towards the end of the year. Consumer demands usually increase at the end of the year because there are many public holidays during this time.
However, the export growth may be dragged by emerging difficulties in the last six months. According to CIEM, macroeconomic developments in the third quarter may be affected by several major factors, such as the UK’s leave from the EU, a possible interest rate change policy from US Federal Reserve (Fed), with a lower rate option not excluded anymore. In this context, there are not many signs of major free trade agreements (FTAs) that Vietnam joins (such as TPP and EVFTA) to be ratified in the third quarter. The belated enforcement of these trade pacts will affect the Vietnamese economy.
Many experts said unpredictable developments and potential price hikes of some commodities essential to global production and consumption will result in pressures on inflation. CPI in 2016 is projected to be much higher than that in 2015 while incomes do not increase correspondingly. For that reason, the purchasing power is unlikely to be improved. Illegal trading, smuggling and counterfeiting may increase in the last months of the year.
In the last six months of 2016, total retail value of goods and services sold may climb 11 per cent over 2015. To achieve this objective, Vietnam first of all needs to ensure the stability of major indicators that may shake domestic production and consumption. Accordingly, CPI will be necessarily kept below 5 per cent as target. The supply and demand of essential goods will be balanced at any point of time. The exchange rate must be controlled before the volatility of hard currencies like US dollars, euro and Chinese yuan to support production, promote export and stabilise the domestic market.
Huong Ly
Vietnamese
