Highlights of Vietnam's economic growth in 2017

Vietnam's economy had a prosperous year with high growth rate and stable macroeconomics. The economic growth rate of GDP in 2017 not only achieved the set plan but also was an impressively high growth rate in the past 7 years (reaching 6.81%). All major economic sectors have made significant contributions to the overall growth record, the positive improvement in consumption and purchasing power; The sharp increase in investment demand due to high credit growth and strong disbursement of FDI capital, trade surplus of goods since the second quarter of 2017, and disbursement of state budget investment capital accelerated from the last months of the year, are all factors important for 2017 to achieve this impressive growth.

Needless to say, Vietnam has had its ups and downs over the last year, and there is still much space for improvement, but the country has done a tremendous job in terms of the economy, and records have continued to tumble throughout the year.

Prime Minister Nguyen Xuan Phuc said at a government meeting on Friday that 2017 was a record-breaking year for the economy.

The country has either met or exceeded its goals for the year, which he describes as "not only a wonderful result but a great experience for 2018."

According to the General Statistics Office (GSO), Vietnam experienced its strongest economic growth in ten years in 2017, expanding 6.81 percent, slightly better than the legislative National Assembly's aim of 6.7 percent.

This has resulted in a $2.7 billion trade surplus, the biggest since 2008.

According to the GSO, the number of new enterprises reached a record high of 127,000 in 2017, much above the previous year's record of 110,000 organizations. This year, Vietnamese stocks reached a 10-year high, achieving 984.24 points in the year's final trading session on Friday.

Since 2008, the VN-Index in Ho Chi Minh City has not surpassed the 800-point mark. According to the Ministry of Planning and Investment, Vietnam set another 10-year record this year in terms of foreign direct investment (FDI) inflows, which totaled $35.88 billion, a 44 percent increase over 2016.

Equal growth contribution from all three major economic sectors

The agriculture, forestry and fishery sector grew significantly compared to the same period in 2016 (2.9% compared to 1.36%). Although still being affected by natural disasters, storms and floods occurred in the northern and central mountainous provinces, affecting agricultural output, as well as a crisis in livestock production, especially with pigs. farming at the beginning of 2017, but the overall growth of the AFF sector was offset by the price of rubber and the positive situation in fruit and vegetable exports, as well as the relatively stable growth of the seafood industry[1], so the growth rate growth reached a high level compared to the same period in 2016.

The industry and construction sector maintained a positive growth momentum thanks to the motivation from the manufacturing industry. For the whole year, the construction industry grew at 8.0%, higher than the same period in 2016 (it increased by 7.57% in the same period). This is an impressive growth rate that recognizes great efforts from the government, in the context of the mining sector's decline and the economy still facing many difficulties.

Looking at the index of industrial production (IIP) also shows that the CNC machining industry has continuously been the main driver of industrial production throughout 2017. Overall, in 12 months, the IIP of the CNC machining industry is estimated to increase by 14.5%. (the highest growth rate in the past 6 years). In the opposite direction, the IIP index of the mining industry remained negative (down 7.1% over the same period in 2016).

In the context of high economic growth, November's PMI had positive developments when it reached 51.6 points in October, continuing to maintain the 23rd consecutive month with an increase of over 50 points. In which, the component PMI in terms of new orders continued to increase. This result shows that business conditions for the month improved strongly with the most noticeable pace since April 2017. Output and new orders grew stronger, job creation was the fastest in six months, input prices rose the most since May 2011. In particular, the main factor that has improved business conditions recently has been the sharp and faster increase in new orders thanks to the increase in customer demand, helping the manufacturing output continue to increase in the coming months end of the year.

International trade recovers strongly

Vietnam's two-way trade had a strong recovery in 2017. The growth rate of import and export reached double-digit growth rates. 2017 is the second consecutive year witnessing a reversal in the balance of trade in goods. Specifically, for many consecutive months in 2017, the trade balance reached a surplus, contributing to improving the trade balance for the whole year to an estimated USD 2.7 billion, which is the highest surplus in the past 5 years.

Export turnover grew strongly, with a total estimated turnover of 213.77 billion USD, an increase of over 21.1%, far exceeding the set plan. Exports have returned to be one of the development engines for the whole economy. The FDI sector still accounts for over 71% of the total export turnover of the whole economy[1], at 155.24 billion USD (up 23% over the same period in 2016) and continues to play an active role in the economy. force in Vietnam's export growth. The domestic sector, although not growing as strongly as the FDI sector, also achieved a fairly high growth rate, reaching US$58.53 billion (up 16.2%).

The structure of imported goods has not changed much. Machinery, equipment, spare parts and electronics, computers and components were still the main imported items in the past year. However, 2017 witnessed a strong growth of imported cars, especially from Asian countries. The main reason is due to the impact of commitments in the AEC and the transfer of car assembly of some big car manufacturers in Vietnam such as Honda and Toyota, causing the price of imported cars to be adjusted down, increasing the quantity of imported cars and domestic car demand.

The recovery of consumption is also reflected in the growth of total retail sales of goods and services in 2017 reaching VND 3,934.2 trillion, up 9.46% compared to 2016. This is a rather high increase within the past 5 years. In which, retail sales of goods reached 2,937 trillion VND, accounting for 75% of the total and increased by 10.9% compared to 2015. Accommodation and food services reached 494.7 trillion VND, accounting for 12 .6% of the total and an increase of 11.9% compared to 2015. Tourism was estimated at 35.9 trillion VND, accounting for 0.9% of the total and up 10.4% over the previous year.

The driving force of consumption is still there, notably the recovery of economic growth, the prices of many commodities, although tending to increase again, are still under control. As a result of solutions to promote economic growth in order to achieve the set plan, the supply of goods on the market has been boosted. In addition, the activities of foreign retail enterprises have grown strongly in Vietnam since the end of 2016. This is a channel to promote the consumption of goods, especially goods with quality assurance but at an affordable price, suitable for middle-class income.

Vietnam's economy becomes Asia's bright spot

International organizations simultaneously recognized Vietnam's GDP growth. Specifically, on December 11, the World Bank (WB) sharply raised its GDP growth forecast for Vietnam in 2017, expected to reach 6.7%, higher than the forecast of 6.3% of the previous year. the same organization put forward earlier. In the medium term, WB believes that Vietnam's growth will be stable at 6.5%, while inflation is expected to remain low. On December 13, the Asian Development Bank (ADB) also raised Vietnam's GDP growth forecast to 6.7% for both 2017 and 2018, higher than the previous announcement of 6.3. % and 6.5%. One point to note is that Vietnam's 6.7% growth rate is a high growth rate compared to other countries in Asia. ADB forecasts economic growth in Asia will reach 6% in 2017 and 5.8% in 2018. ADB also forecasts economic growth in Southeast Asia to reach 5.2% in 2017 and 2018, compared with forecasts of 5% and 5.1% respectively released in September.

Vietnam's business environment and national competitiveness have made great strides. Vietnam is ranked 68 out of 190 economies by the World Bank in terms of business environment, up 14 places compared to 2017 and up 30 places compared to 2012. The World Economic Forum (WEF) ranks Vietnam's competitiveness. Nam increased 5 places in 2017, ranked 55/137 countries and jumped 20 places compared to 5 years ago.

Previously, according to the World Intellectual Property Organization's 2017 Global Innovation Index Report, Vietnam had risen from 59th position out of 128 last year to 47th out of 127 economies, up 12 places. . This is the highest ranking Vietnam has ever achieved. Vietnam also ranks No. 1 on this index among low-middle-income countries. Notably, credit rating agency Moody's also raised its outlook for the Vietnamese banking system from stable to positive.

By Hanh Tran

References

1. Minh Nga, December 29, 2017. VN Express. 2017- a record breaking year for Vietnam’s economy. Retrieved from: https://e.vnexpress.net/news/business/data-speaks/2017-a-record-breaking-year-for-vietnam-s-economy-3691975.html

2. Ban phan tich va du bao, January 10, 2018. Bo ke hoach va dau tu. Cac diem noi bat trong kinh te Viet Nam nam 2017. Retrieved from: http://www.ncif.gov.vn/Pages/NewsDetail.aspx?newid=20519

3. Ho Quang Phuong, December 26, 2017. Bao Quan Doi Nhan Dan.Kinh te Viet Nam 2017, buoc chuyen quan trong ve chat. Retrieved from: https://www.qdnd.vn/kinh-te/cac-van-de/kinh-te-viet-nam-nam-2017-buoc-chuyen-quan-trong-ve-chat-527480