Economy waking to a new dawn

Deputy Prime Minister Nguyen Xuan Phuc last week told the National Assembly that the economy continued reaping more positive results as compared with previous months. “Gross domestic product (GDP) grew 4.5 per cent in the second quarter, higher than the first quarter’s 4 per cent. In total, the economy will grow 4.31 per cent in this year’s first half.”

In the first six months of 2012, the consumer price index (CPI) was estimated to augment 3 per cent, the lowest level compared to the corresponding periods in 2011 (12.07 per cent) and 2010 (4.55 per cent).

Meanwhile, the total retail and service revenue was estimated to increase 20.3 per cent on-year. If price hikes were not taken into account, that growth was only 6.6 per cent.

The industrial production index (IPI) in June was projected to rise 4.4 per cent, up from 4.2 per cent in the first five months. Also, inventories dropped from 34.9 per cent in March to 32.1 per cent in April and 29.4 per cent in May.

Vietnam’s total export turnover in 2012’s first half was expected to rise  20.8 per cent on-year. Meanwhile, the trade deficit was equal to 2.9 per cent of total export turnover and lower than the same period in 2011 (18.1 per cent) and 2010 (14.16 per cent).

“The economy has been gradually escaping from a stage filled with huge difficulties, though lots of challenges remain ahead. However, the government is determined to realise its target of stabilising the macroeconomy, taming inflation and boost ing local production. We will try to see the GDP grow 6 per cent and inflation rate 7-8 per cent,” Phuc said.

The Ministry of Planning and Investment (MPI) reported that during January-May the number of newly registered enterprises was 30,100, which was higher than 21,800 enterprises ceasing operation or dissolving in this period.

Moreover, in May alone, the number of enterprises with operation cessation and dissolution decreased 10 per cent against the average monthly number of such enterprises in the first four months of 2012. “It is also a signal showing that the economy is gradually recovering,” Phuc said.

Raymond Mallon, an Australian economist with over 20 years studying Vietnam’s economy, said  increased liquidity and lower interest rates might provide some immediate relief for struggling firms, “but it is important that any relief is not at the cost of macroeconomic stability and sustained growth”.

Phuc said the government would try to make credit grow 2 per cent each month of this year’s remaining six months, so that total credit growth for the whole year would be 12-13 per cent. In this year’s first half, the credit almost saw no growth.