Vietnam economy 2018 and outlook 2019-2020: New opportunities - New requirements

Vietnam economy 2018 and outlook 2019-2020: New opportunities - New requirements

Although achieved impressive growth results in 2018, Vietnam Government also recognizes many challenges to the economy, from concerns about cyclical risks to uncertainty in the context of escalation trade war between the US - China.

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With the support of the Australian Program Supporting Vietnam's Economic Reform (Aus4Reform Program), on the morning of January 17, 2019, the Central Institute for Economic Management (CIEM) held the Siminar:“Vietnam's Economy 2018 and outlook 2019-2020: New opportunities - New requirements” serves several objectives, including:

(i) to update, analyze and evaluate macroeconomic developments in the fourth quarter and 2018;

(ii) to assess the macroeconomic outlook for 2019;

(iii) to cover selected economic issues based on quantitive and/or qualitative assessment;

(iv) to propose recommendations on economic reforms (including institutional reforms) and on policy solutions for macro-economic management in 2019.

According to Dr. Nguyen Dinh Cung, Aus4Reform Program Director said: "Vietnam has entered the year 2018 with many conflicting expectations. The socio-economic changes in 2017 is estimated to be positive through 2018. However, Government also acknowledged many challenges to the economy, from concerns about cyclical risks to uncertain in the context of escalating trade war between the US - China".

“These expectations and recognition have laid the foundation for more flexible, prudent and coordinated operating measures. In addition, it’s vital to improve the economic institutions and business environment, promote innovation and creativity. Therefore, the economy the economy is initially stable, with the resilience improved significantly in the international and regional context with complicated and unpredictable fluctuation” said Dr. Nguyen Dinh Cung.

Regard to the macroeconomic situation in 2018, CIEM said that GDP in the fourth quarter increased by 7.31%, lower than the same period in 2017, but higher than the II-III quarter. The growth rate of the whole 2018 GDP reached 7.08%, the highest level since 2008. Vietnam's economy continued to expand at 6 consecutive quarters in the growth cycle.

More detailed analysis of some outstanding economic issues today, speaking at the workshop, Mr. Nguyen Anh Duong (Head of Macroeconomic Policy Department - CIEM) shared: “Economic growth is still higher than the potential, initially handle well and maintain reform momentum in the uncertain context. The macroeconomic environment continues to be stable: inflation is controlled, not subject to monetary pressure, the VND / USD exchange rate has been more stable in the fourth quarter compared to the third quarter, the trade balance has been surplus at a century level. continent (6.8 USD billion) and disbursed FDI (19.1 USD billion)”.

Mr. Nguyen Anh Duong (Head of Macroeconomic Policy Department - CIEM) is speaking at Siminar:“Vietnam's Economy 2018 and outlook 2019-2020: New opportunities - New requirements”

Assessment of macroeconomic prospects in 2019 forecast economic growth in 2019 is estimated at 6.93%. Export growth is forecast at 9.4%. Trade surplus is at USD 2.04 billion. The average consumer price increase is about 3.88%. Macroeconomic developments in 2019 may be influenced by a number of factors. Especially, the US-China trade tension is still unpredictable, as it depends on the ability to negotiate trade (and the actual level of results, if any) between the US and China.

The report also assesses the achievements, unfinished tasks after 5 years of implementing Resolution No.19 and new requirements in the context of a strong transition world to adapt new production of the The Industrial Revolution 4.0. Accordingly, the report states that besides maintaining the goal of improving the business environment according to international practices, developing areas of Vietnam with comparative advantages,  should focus on improving the elements of technology, innovation, quality of human resources, quality of public services.

Vietnam entered 2019 with expectations of many opportunities and challenges. The belief of domestic and foreign business community continues to increase after the Government's commitment to reform as well as the ability of Government to respond effectively to external shocks. New free trade agreements (CPTPP, EVFTA, RCEP) and The industrial revolution 4.0 can create additional impetus for reform and access to resources (skills, technology, capital) from outside.

However, Vietnam continues to handle the fundamental challenge of institutional quality, infrastructure and human resources. Strategic competition between the US and China is stillgoing on, forcing Vietnam to consider more carefully in participating in initiatives for these two countries to lead. Economic, trade and investment activities may face many uncertainties, especially in the first half of 2019, due to the risk of economic decline in many key economies.

In summary, Seminar on "Vietnam Economy 2018 and Outlook 2019-2020: New Opportunity - New Requirement" re-emphasizes the message of policy priorities should continuely focus on improving economic foundation micro and innovate economic institutions in a more friendly and creative way  and environment, associated with effective handling of risks in a volatile international economic environment.