In the uncertain world, Vietnam needs to prioritize macroeconomic stability as a foundation for reform

In the uncertain world, Vietnam needs to prioritize macroeconomic stability as a foundation for reform

After impressive socio-economic results in 2018, Vietnam is expected to continue its momentum in 2019, aiming to achieve the planned targets for the period 2016-2020.

With the support of the Australia Supports Economic Reform in Vietnam" (Aus4Reform) programme, the Central Institute for Economic Management organized the Seminar " Vietnam’s economy in a violate world: Making reforms work for sustainable growth” aimed at: updating, analyzing and evaluating macroeconomic developments in the first quarter of 2019; update macroeconomic prospects in 2019; at the same time, propose a number of policy solutions for macro-economic management and administration in 2019.

After impressive socio-economic results in 2018, Vietnam is expected to continue its momentum in 2019, aiming to achieve the planned targets for the period 2016-2020. However, Vietnam also identified many difficulties and challenges to realize that expectation, placed in the context of an increasingly uncertain international economy and not much geography for macroeconomic policies to promote growth.

Remarkable points of the Macroeconomic Report for the first quarter of 2019

Through assessment of macroeconomic developments in the first quarter of 2019, Mr. Nguyen Anh Duong, Head of Macroeconomic Policy Department under the CIEM said: “GDP in the first quarter reached 6.79%, lower than the first quarter of 2018 and the initial plan of the Government, but still higher than the same period of 2009-2017.”

Also in the first quarter, the business sector continued to have strong structural adjustment. Manufacturing and processing enterprises are less optimistic about the production and business situation. The business community still faces difficulties in entering the market, especially the "post-registration" burden, and access to transparent information.

Notably, the average CPI increased by 2.63%, the average inflation increased by 1.83%, indicating that operating monetary policy remained stable and did not put pressure on the price level.

In addition to fluctuations, the economy has also achieved certain achievements in the first quarter of 2019 such as:

The effectiveness of fiscal policy coordination with other macroeconomic policies has been significantly improved. Restructuring the state budget has brought positive effects and fiscal policy management has been more flexible.

Trade policy continues to promote quickness and pragmatism, especially in relation to key economies to help businesses take advantage of opportunities and reduce the risk of being anti-subsidized and anti-dumping.

Deposit and lending interest rates were kept stable in the first quarter of 2019, total payment means increased by 2.67% compared to the end of 2018 and 10.99% compared to the end of the first quarter of 2018.

The updated results show that economic growth in 2019 is estimated at 6.88%. Export growth is forecast at 9.02%. Trade surplus is at 3.1 billion USD. The increase in consumer prices in the year is about 3.71%.

From the above results, Mr. Duong said: “Until April 2019, Vietnam's macroeconomic management formula still proved appropriate. Our view is still to stabilize the macro economy as the foundation for reform. The results of growth recovery in the past years have an important part from the economic institutional reforms in general and the business environment in particular. "

The message of prioritizing macroeconomic stability, improving the business environment

At the workshop, Dr. Nguyen Dinh Cung, the director of Aus4reform program, emphasized that “The Government continues to emphasize the priority of macroeconomic stability, improving the business environment and the resilience of the economy. The movement of economic growth and inflation continues to be closely monitored with many moves and messages to run throughout the first quarter of 2019”.

Vietnam still has to deal with many challenges, mainly on the micro-economic foundation. Bad debt of legal documents is still popular, leading to a situation of thinking and new policies being slow to be implemented. Even with CPTPP, law amendments and guidelines are slow to implement, although senior leaders and businesses expect quite a lot.

More importantly, policy enforcement is still slowly improving. The fact that the Government and the Prime Minister regularly reminds the groups of key solutions on socio-economic development partly shows the closeness, but on the other hand also indicates that the groups of solutions have not been awared and / or full implemented at all levels and branches, local.

However, generally, CIEM believes that the Government is on the right track with reform, but the recommendation cannot be rushed or impatient with economic growth.

CIEM's Q1 / 2019 macroeconomic report also recommends that the Government should do better to improve the business environment, open thinking with new issues of the digital economy, the 4.0 revolution ... also such as solving debt dynamics policy.