2018 economic targets undergo NA inspection

Manufacturing is a strong driving force behind Vietnam’s growth, Photo: Le Toan

Under a report on the plan compiled by the Ministry of Planning and Investment (MPI), to ensure a growth rate of 6.5-6.7 per cent for next year, the government has set on-year targets for some key sectors in the economy, including agro-forestry-fishery (up 3.07-3.19 per cent), industry and construction (up 7.17-7.59 per cent), and services (up 7.3-7.39 per cent).

Of the industrial sector’s growth, the manufacturing and processing sector, which creates 80 per cent of Vietnam’s industrial growth, is expected to rise 12.15-12.7 per cent on-year.

The export growth target is set at 7-8 per cent.

Registered foreign investment is expected to be $27.5-28.5 billion, while disbursements are projected to hit around $21 billion – higher than the forecast $18 billion for this year.

“These targets are thoroughly weighed, based on the resolution of the 12th National Party Congress [organised in January 2016], the five-year Socio-Economic Development Plan for 2016-2020 already adopted by the National Assembly, estimations of achievements of 2017’s socio-economic development, domestic and international situations, and disadvantages and difficulties for 2018,” said MPI Minister Nguyen Chi Dung.

Spain-based FocusEconomics, which provides in-depth economic analysis globally, wrote last week in a report that Vietnam’s economy is expected to expand 6.5 per cent in 2018 – which is up 0.1 per cent from last month’s forecast – and 6.5 per cent in 2019.

FocusEconomics estimated that industrial output will grow by 7.6 per cent in 2018, and 7.4 per cent in 2019.

“The economy is projected to continue along this robust growth trajectory for the remainder of the year and into 2018, buoyed by resilient performance in exports as new factories funded by foreign investment open, and a flourishing influx of foreign direct investment (FDI), fuelled by more attractive investment opportunities,” read the report.

“Stellar growth in the manufacturing sector, a strong service sector, and a boost in private consumption buoyed by a rapid rise in private-sector credit, propelled the fastest economic expansion in over nine years,” the report said.

Also highly commending Vietnam’s economic prospects, HSBC forecasts that the country will grow 6.4 per cent next year, thanks to strong increases in manufacturing and FDI.

“FDI jumped sharply in this year’s third quarter and should continue to trickle in toward the end of the year. FDI (newly registered capital) is up 30 per cent year-to-date year-on-year as of the third quarter to reach $14.5 billion,” said HSBC economist Noelan Arbis. “As a comparison, new FDI in 2016 totalled just over $15 billion, which suggests that this year’s numbers should easily surpass last year’s.”

In another case, the Asian Development Bank (ADB) has predicted that Vietnam’s economy will grow 6.5 per cent next year, also crediting a jump in FDI and manufacturing.

“Continued buoyancy in FDI inflows should add impetus to growth in the coming months, as should the recent easing of monetary and credit conditions,” said an ADB report on Vietnam’s economic prospects released last month. “Other economic indicators also point to strong growth next year. The manufacturing Purchasing Managers’ Index continues its rising trend. New orders have risen continuously since December 2015 to signal improving business conditions for manufacturers.”

However, the government admitted that achieving a 6.5-6.7 per cent economic growth for next year, which might be the same as this year, is a difficult mission. This comes in light of new potential challenges the economy could face next year, such as import tax reductions due to international and regional commitments and decreases in the exploitation of minerals, coal, crude oil, and gas.

For example, the government will likely reduce the exploitation of crude oil by two million barrels against 2017.

“All of these challenges will have a big impact on our goals for 2018,” Minister Dung said.