General comment that GDP has many opportunities to continue to improve in the last two quarters but there is a possibility that growth will once again fall short of the plan as the increase in the first six months is quite low. . However, sacrificing short-term goals is essential for Vietnam to look for deep and sustainable growth trends in the medium and long term.

Mining continues to limit GDP growth

General Statistics Office recently announced the socio-economic situation in the first six months of this year, of which the GDP growth rate was 5.73%.

Specifically, in the second quarter, GDP reached a 6.17% increase, a sharp rise compared with the 5.15% increase in the first quarter. Notably, the agricultural, forestry and fishery sector The trend continues with a 2.65% rise, contributing 0.43 percentage points to the overall growth rate (compared to 0.18% for the same period last year). However, the industrial and construction sector saw a much lower increase (only 5.8%) over the same period of 2016 (up 7.1%), mainly due to a decline in the mining sector. %. Only the service sector is still experiencing high and stable growth of 6.85% (the highest level over the same period last year) and contributes 2.59 percentage points (equivalent to 45% ) Into overall growth. Some sectors in the service sector showed high growth rates: wholesale and retail (up 7.1%); Accommodation and catering services (up 8.9%); Finance, banking and insurance (up 7.66%); Real estate business (up 3.86% – the highest increase in recent five years).

There are opportunities but challenges remain
The sharp decline in the mining sector (down 8%) led to a slowdown in GDP, suggesting that the transformation of Vietnam’s economic model into a time-consuming and negative side effect is unlikely. Inevitable
Although there are signs of improvement but the growth rate of 5.73% of GDP in the first six months of the year is still relatively low. This continued to put great pressure on the government’s macro-economic policy in the last two quarters of the year.

Prime Minister Nguyen Xuan Phuc is still steadfast in recent government meetings with a target of 6.7% growth for the whole of 2017. Thus, growth in the remaining two quarters will be over 7% . This is a great challenge when it is common in recent years that only 4 quarters of GDP will increase by approximately 7%.

From a supply-side perspective, given the growth dynamics of the three major economic sectors, if GDP growth is expected to rise sharply in the next two quarters, it is hoped that this will be mainly concentrated in the industrial sector and build. The reason is that the region is experiencing a much lower growth rate (only 5.81%) over the same period of the previous two years (by 9% in 2015 and 712% in 2016) The manufacturing and manufacturing industry in the last two quarters still grew at the same level last year (10.5%). The factors that led to the slow growth of the industry and construction sector came from the mining sector with the decline in crude oil production.

Recognizing the developments, the government has also asked Congress to increase its production by about a million tons (12.28 million tons planned for the beginning of the year) to support growth in the short term. According to calculations by the National Financial Supervisory Commission, if the extraction of one million tons of oil will help GDP grow by nearly 0.2%.
From the aggregate demand side, there are grounds for expectation that GDP will be supported more by household consumption, private investment, government spending and export growth in the second half of the year. Consumption (C) is still considered to be potential when the share of personal consumption in Vietnam’s GDP is only 65% ​​- lower than some similarly developed countries like the Philippines (73). , 7%), Egypt (80.3%) …

As inflation is on the downward trend (helping to improve purchasing power of the people), personal consumption may be pushed up from now until the end of the year. For Private Equity (I), the State Bank’s monetary easing policy is creating favorable conditions for credit growth to accelerate (as of June 20, 2017 reached 7.54%). And is expected to grow even faster in the next six months.

Regarding public investment, disbursement of state budget investment is facing difficulties when the disbursement rate reaches only 38.7% of the annual plan. However, the Government has recently directed ministries and sectors to remove bottlenecks to further bolster public investment. If the investment capital construction is smooth, the construction industry will grow well, thereby contributing to the growth of GDP. The final factor is export, but it should only be expected to export commodities such as agricultural products, while for the manufacturing and processing industries, the increase in exports also often leads to increased imports. Contribution to GDP growth will be more limited.