Growing repidly, Vietnam’s economy still remains behind regional peers

12-Feb-2019 Intellasia | Hanoi Times | 6:00 AM Print This Post

Vietnam was one of the fastest growing economies in the world in 2018 with a decade-high GDP growth of 7.08 percent, however, it still ranked 136th out of 188 countries and territories in terms of GDP per capita, according to Nguyen Chi Dung, minister of Planning and Investment.

Vietnam’s current development level is equivalent to that of South Korea 40 years ago, and Malaysia 20 years ago, therefore, the road ahead is very challenging, Dung said in early February.

Reflecting on Vietnam’s economic performance in 2018, deputy prime minister Vuong Dinh Hue said that the economy has been on positive trend, thanks to significant improvements in productivity, growth quality and national competitiveness.

In 2016, it would take 2.94 percent of credit growth rate for each one percentage point of GDP growth, while in 2017 the percentage reduced to 2.68 percent.

Vietnam’s credit growth rate in 2018 was estimated at 14 percent and the GDP growth rate of 7.08 percent, indicating a 2.1 percent of credit growth rate for a 1 percent of GDP growth, Hue stressed.

In terms of productivity, Vietnam has been one of countries with highest productivity growth in Asean. In 2018, the economy’s labour productivity reached VND102 million (US$4,512) per worker, up $346 or 6 percent year-on-year.

Vietnam has participated in 12 free trade agreements (FTAs) with utilisation rate of 35 percent and the openness level increasing from 120 percent of GDP to 200 percent over the last 10 years. Under this circumstance, Vietnam is considered vulnerable and sensitive to external shocks, especially the ongoing US-China trade friction, according to an expert at SSI Securities Corporation (SSI).

Going forward, Vietnam would need to take advantage of foreign trade, while bolstering the internal strength for sustainable development, said the expert.

Vietnam, on a positive note, could benefit from the trade war thanks to the relocation of factories and investment flow from China. However, Vietnam could face the risk of Chinese goods flooding the domestic market, in turn putting pressure on local enterprises.–vietnam-s-economy-still-remains-behind-regional-peers.html


Category: Economy, Vietnam

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