Economic experts argue that despite inflation being under control, the government’s year-end management policies should be focused on stimulating economic growth to ensure this year’s 5.5 percent growth target set by the National Assembly (NA).
To reach this goal, GDP in the remaining months must grow at nearly 6%.
In the first half of this year, the country’s GDP was estimated to increase 4.9% against the same period last year thanks to significant contributions from economic sectors and GDP growths of 4.76% in the first quarter and 5% in the second quarter.
Apart from economic growth, improved social welfare policies have facilitated low-income earners’ purchase of social houses.
According to Ha Quang Tuyen, Head of the Ministry of Planning and Investment (MPI)’s National Asset Department, it is not easy task to achieve the 5.5 percent growth target in the current economic doldrums such as declining aggregate demand, unexpanded production scale, still high inventory and businesses’ low ability to have access to bank loans.
The first half’s CPI growth rate of 6.73 percent has basically met the target set by the NA. However, economic experts say that the macroeconomy has not yet developed steadily in the context of possible inflation rearing its ugly head again.
A recent MPI survey shows that each economy has different inflation rates. For example, inflation rate of 1 percent for the Japanese economy is reasonable while Vietnam’s level ranging from 7-8% is good for higher economic growth.
Nguyen Huu Thang, Head of General Statistics Office (GSO)’s Price Statistics Department says growth stimulation is essential in tandem with ensuring money supply growth and aggregate demand.
The possibility of the return of inflation is high, requiring the Government to focus more on keeping inflation in check. This year’s inflation is predicted to maintain at a low level but high increases in investment and disbursement will adversely affect growth rates in the following years, Thang notes.
Asides from potential for the development of industrial sector and services, Vietnam remains an attractive investment destination for foreign investors. Therefore, how to attract more foreign investment will be an effective solution to push up Vietnam’s economic development in the future.
Ho Thanh, Head of MPI Department for Construction and Investment Capital says this year’s foreign direct investment (FDI) attraction has increased in both registered and disbursed capital. Investment contribution to GDP in the first six months accounted for 29.7% and will be estimated at approximately 30 percent for the whole year.
The country is currently focusing on developing infrastructure facilities and investing in high-tech sectors to improve people’s living standards on a par with those in the region. For that reason, “hot” growth and increasing investment is evitable, Thanh stresses.
According to the MPI, 2013 can be seen as the bottom for 2014 to recover economic growth under the base of “U” shape. Therefore, the set 5.5 percent growth rate is a hard nut to crack.
However, advantages have been seen in the second half such as higher purchasing power, improved banking restructuring and settlement of bad debts and continuously adjusted interest rates in line with developments of the macroeconomy and inflation.