Seeking new drivers to boost Vietnam’s economic growth

Monday, 2016-07-04 12:02:19
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NDO - Vietnam’s total economic output in the first six months of 2016 grew by 5.52%, which is higher than the average during the same period from 2012 to 2014 but lower than the 6.32% expansion rate in the first half of 2015.

Calculations by the General Statistics Office suggest that the economy must grow at least 7.6% in the remainder of the year so that Vietnam can achieve the projected growth target of 6.7% for the whole year.

This is a highly formidable challenge if no urgent action is taken.

A breakdown of sectors shows that output of the agro-forestry and fisheries industries slumped by 0.78% in the first half of 2016 while growth in industry and construction, which make the largest contribution to GDP, was also lower than the previous year.

Industrial output expanded by only 6.82% compared with 9.66% seen in the first half of 2015.

Exports, a driver of growth for many years, also posted weaker-than-expected growth at 5.9% compared with last year’s 9.3%, of which domestic enterprises saw an increase of 3.3% and the foreign sector 6.9%.

Investment, another main driver of growth, also saw low State budget investment. According to the State Treasury’s data, disbursement of capital for construction as of June 30 was equivalent to only 25% of the year’s target, compared with 42.8% in 2014 and 36.8% in 2015.

While Vietnam’s growth still largely depends on investment, such a slow disbursement pace does very little to stimulate the economy.

It is apparent that there is not much room for growth this year. Increasing crude oil output as a measure to boost growth like what was taken in the previous years is also of little help as global oil prices, despite signs of recovery, are still far from being sustainable.

In this context, hope can only be pinned to enterprises. In addition to existing ones, Vietnam has an additional 54,500 newly established companies, which, along with nearly 15,000 businesses resuming their operation, will become an important force to drive sustainable economic growth.

More than ever, supporting enterprises by substantive measures is an urgent task.