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VEPR: Two scenarios for 2019 growth

Released at: 16:35, 29/05/2019

VEPR: Two scenarios for 2019 growth

Photo: Ngoc Lan

Vietnam Institute for Economic and Policy Research releases "Vietnam Annual Economic Report 2019: On the Doorstep of the Digital Economy" report.

by Ngoc Lan

Vietnam’s economic growth in the opening months of 2019 was slower than in the same period last year due to internal and external factors, according to the “Vietnam Annual Economic Report 2019: On the Doorstep of the Digital Economy” released by the Vietnam Institute for Economic and Policy Research (VEPR) on May 29.

Analyzing the determinants of growth, VEPR experts said that economic growth, exports, and jobs are increasingly dependent on the FDI sector but with low benefits, as environmental risks and inequality in the business environment are high.

Meanwhile, the private sector has not been strong and must cope with many barriers from the domestic institutional and business environments. Monetary policy is being gradually narrowed by increasing inflationary pressure as well as by commitments to exchange rates.

Fiscal policy does not create positive changes in the structure of budget revenues, with high public debt and budget deficits, while State assets are declining.

The report forecast that, in 2019, Vietnam’s economy will face two scenarios.

In the first, growth will reach 6.56 per cent, roughly the target set by the National Assembly. VEPR Director Mr. Nguyen Duc Thanh said that this scenario may happen if global economic conditions are less favorable due to the impact of US-China trade tensions, which will bring new pressures that will put Vietnam at risk of incurring a trade deficit with its northern neighbor and increasing competition in the domestic market, as both the US and China can boost exports to Vietnam. “We believe that Vietnam’s exports to the US and China are not flexible enough to increase strongly in the context of trade tensions,” he said.

The second scenario is more feasible, with growth of 6.81 per cent meeting the target of the National Assembly. This scenario is likely, thanks to dynamic momentum from growth in 2018, coupled with government efforts to improve competitiveness and productivity. The domestic business sector is also trying to shift in the field of international trade.

The report also focuses on the theme of Vietnam in front of the digital economy. The trend of digitizing the economy and social activities is the foundation for Industry 4.0 to explode. This will create new challenges from its ability to break down sector and market structures, with the transformation of the entire global production, management and governance system. Vietnam cannot stand outside of this trend, and its preparations are incomplete.

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