Everything in place for robust growth in 2019

The Vietnamese economy is buoyed by the export-oriented production sector Photo: Le Toan

Last Monday, Prime Minister Nguyen Xuan Phuc and Deputy Prime Minister Vuong Dinh Hue ­received the latest bulletins from local and international ­experts and organisations about Vietnam’s development impetus for 2019.

“There are optimistic forecasts for Vietnam’s economic growth for 2019,” the prime minister stated. “The World Bank projects the growth rate will be over 6.6 per cent, while Standard Chartered Bank, ANZ, and the New York economic consultancy organisation stated that the Vietnamese economy will grow the fastest in the ASEAN and become a highlight of the global economic picture. Vietnam has many opportunities to hit a growth rate of 7 per cent in 2019, with a strong rise in foreign direct investment (FDI).”

Trading Economics, which provides more than 20 million economic indicators for 196 countries, last week released its fresh econometric calculation that Vietnam’s GDP is expected to be $255 billion by the end of this quarter, up from last year’s $245 billion. The figure is projected to hit around $281 billion in 2020.

“GDP growth in Vietnam is expected to be 6.9 per cent by the end of this quarter,” the firm said. “We estimate the rate to stand at 6.6 per cent in 12 months’ time. In the long term, the rate is projected to trend around 6.5 per cent in 2020.”

Spanish-based FocusEconomics, which provides in-depth global economic analysis, told VIR that under its fresh survey on the performance of Southeast Asian economies, Vietnam is expected to continue being among the top performers.

The country is projected to grow by 6.6 per cent in 2019, far higher than almost all nations in the region, such as Indonesia (5.2 per cent), Thailand (3.8 per cent), Malaysia (4.6 per cent), the Philippines (6.4 per cent), and Singapore (2.6 per cent).

Vietnam’s expected 2019 growth will also be higher than that of the Southeast Asian region (4.9 per cent) and Asia as a whole (5.8 per cent), excluding Japan.

According to the recently released 2019 ASEAN Report by Fullerton Markets, Asia’s fastest-growing brokerage firm, Vietnam is considered a big highlight in Asia with very high growth expected for 2019.

“Vietnam is one of the economies with the fastest development in the world, with an expected growth rate of about 7 per cent this year,” stated the report.

One of the reasons behind this is a strong inflow of FDI into the country, which has a very competitive advantage in demographics, salaries, and electricity costs.

“Prime Minister Nguyen Xuan Phuc is pushing the development of the country as a powerhouse that manufactures and exports goods, including everything from footwear to smartphones,” the report said.

Under a World Bank report on Vietnam’s economic performance released at the tail end of 2018, the country is projected to climb 6.6 per cent this year, with growth continuing “to be underpinned by robust domestic demand, reflecting strong private consumption and investment growth.”

Meanwhile, the Asian Development Bank also forecast the rate to reach 6.8 per cent in 2019, and Fitch Solutions projected that Vietnam’s real GDP growth will rise to 6.5 per cent, in line with the wider trend of slowing global growth.

These international organisations have highlighted FDI as a key driver of high growth in 2019 and beyond. Last November, the National Assembly set a target of 6.6-6.8 per cent for the year, with about nearly $20 billion in disbursed FDI.

Trading Economics stated, “FDI in Vietnam is expected to be $4.5 billion by the end of this quarter. We estimate the [registered] figure will stand at $20.5 billion in 12 months’ time. In the long term, [registered] FDI is projected to reach around $22.5 billion in 2020.”

FDI played a major role in the growth of 2018. Vietnam attracted healthy levels of such investment, luring in over 3,000 more projects than in the previous year. This was despite registered capital in 2018 reaching $17.98 billion, down 15.5 per cent from the previous year. However, FDI disbursement hit $19.1 billion, up 9.1 per cent on-year. Total foreign-related stake acquisitions reached $9.89 billion, up 59.8 per cent on-year.

“Vietnam is an FDI success story,” said Caitlin Wiesen, UNDP representative in Vietnam. “To attract higher quality FDI, policies must be implemented as an integral part of the country’s socioeconomic development strategy. In this context, greater focus could be placed on the creation of sustainable tech startups that usher in the benefits of Industry 4.0 technologies through adding competitive advantages to industries and even transform the entire process.”

At the recent Vietnam Economic Forum, PM Phuc told the international business community that the government will ­always consider FDI an ­important part of the ­economy. “We will continue our ­institutional reforms, protecting the rights of enterprises in conducting business and ­investment in Vietnam,” the prime minister stressed.