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Vietnam PM lowers 2016's growth target

access_time Oct 04,2016 chat_bubble_outline 64 views
Vietnam PM lowers 2016's growth target
Workers assemble shoes in a shoe factory near Hanoi. Vietnam is seeking to expand its manufacturing sector as a high tech supplier. Photo by Reuters/Kham

The Vietnamese Prime Minister Nguyen Xuan Phuc has officially admitted that Vietnam will probably miss its economic growth target of 6.7 percent this year.

The annual forecast has been lowered to between 6.2 percent and 6.5 percent, he said during a two-day cabinet meeting which ended on Tuesday .

The economy would need to expand 7.1-7.3 percent in the final quarter to achieve the new full-year goal, Phuc said at the meeting.

“The target is high and challenging but it is not unattainable,” he said.

Phuc took office in April when the country was struggling with the worst drought in almost a century. Then came the mass fish deaths along the central coast. Adverse weather conditions, along with the environmental disaster, have put the brakes on an economy that grew 6.68 percent in 2015.

Economic growth was 5.92 percent in the January-September period, much lower than the 6.53 percent rate seen a year ago, according to official statistics.

Weak growth in agriculture and mining dragged down the economy in the third quarter, according the statistics office.

The mining sector continued its losing stretch, contracting 6.8 percent in the quarter compared to a year ago, due to low global commodity prices, government data show.

“GDP growth in 2016 will be lower than the target but how much lower will very much depend on the mining sector,” said Ha Quang Tuyen, head of the General Statistics Offfice’s National Accounts Department.

Economists predicted that there is still a chance for the economy to pick up its speed in the final quarter, fuelled by more foreign direct investment and an agricultural recovery.

The Southeast Asian country has received an estimated $11 billion in foreign direct investment inflows in the first nine months of the year, up 12.4 percent from the same period last year, government data show.

Agricultural production which experienced a negative growth of 0.18 percent in the first six months of the year has shown signs of recovery in the third quarter, edging up 0.65 percent.

Meanwhile, the manufacturing sector continued to grow at a decent pace as the Nikkei Vietnam Manufacturing Purchasing Managers' Index, or PMI, rose to a 16-month high of 52.9 in September, higher than the ASEAN’s average of 50.5.

"With growth solid across the third quarter as a whole, the manufacturing sector looks set to help drive GDP growth in 2016," said Andrew Harker from IHS Markit, which conducted the survey.

“All the government ministries and local authorities need to redouble their efforts to clear hurdles to business and manufacturing,” Prime Minister Phuc said.

“Determination only will not be enough, we must come up with workable solutions to achieve the full-year target of 6.3-6.5 percent,” he emphasized.

Vietnam’s economy moderated in the first half, expanding only 5.5 percent, down from 6.3 percent growth in the same period last year.

The Asian Development Bank last week adjusted down its growth forecast to 6 percent for the year.

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