HCM City – Vietnam’s economy is forecast to grow by 6.8-6.9 percent in 2019 on the back of sound economic performance in 2018, according to the Vietnam Macro-Economic Outlook 2019, which was announced in Ho Chi Minh City on January 8.
Associate Professor Nguyen Duc Trung, who was in charge of compiling the report, said the 11-year record growth of 7.08 percent last year was made possible by macro-economic stability, inflation kept below 4 percent for the third three consecutive year, and an improving business climate.
According to a survey by the General Statistics Office, 85.1 percent of enterprises lauded the improved business environment in the first quarter of 2019, compared to the fourth quarter of 2018.
The Purchasing Managers’ Index reached 56.6 point in November 2018, the highest among ASEAN member states, while the sustainable development index went up 11 places in 2018, placing Vietnam 57th out of 176 countries worldwide.
Experts said the growth in 2019 will be fuelled by the optimism of the private sector and the recovery of the agro-forestry-fisheries sector alongside good prospects of the world economy. Thanks to valid bilateral and multilateral free trade agreements, Vietnam will also be well-positioned to expand the global consumption of its goods.
Nguyen Xuan Thanh, Development Director of Fulbright University Vietnam, said the positive outlook of private consumption will facilitate the expansion of the services sector, mostly in retail, finance, banking, insurance, tourism, dining, and lodging.
The agro-forestry-fisheries sector will maintain higher growth if the crop structure is shift towards serving exports, especially with more markets welcoming Vietnam’s farm and aquatic produce.
Meanwhile, the US-China trade dispute, which is only the tip of the iceberg as trade protectionism and non-tariff barriers are rising, is expected to bring both good and bad impacts on Vietnam, which is an open economy (in late 2018, Vietnam’s economic openness was only just behind Singapore in Southeast Asia).
In the worst scenario, Vietnam’s export markets would suffer greatly from the dispute, and global economic instability would reduce the liquidity of capital flows resulting in shrinking foreign investment.
Le Xuan Nghia, Director of the Business Development Institute and a member of the National Advisory Council on Finance and Monetary Policies, said a 7 percent growth rate is becoming hard to achieve due to uncertainties in the global economy during the 2019-2020 period. Moreover, the US-China trade war in 2018 demonstrated that trade protectionism is increasing.
The foreign direct investment flow has been declining across the world, gearing more towards countries with high-tech resources. The total registered FDI in Vietnam in 2018 decreased by 15.5 percent from the previous year, signaling that it will drop more in coming years, he said.
In 2018, the Vietnamese economy expanded by 7.08 percent, a record in the past 11 months, one of the highest growth rates in the region and the world, supported by a 12.98 percent growth in the manufacturing and processing sector and a 3.76 expansion in agriculture during 2012-2018.
The total export-import turnover surpassed 482 billion USD in 2018, while trade surplus hit 7.2 billion USD, up 147 percent from 2017. For the first time, Vietnam’s State budget collection was able to surpass estimates by 3.5 billion USD.