Vietnam still in difficulty despite macroeconomic improvements

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Vietnam still in difficulty despite macroeconomic improvements

Macroeconomic indicators in the year through September have changed for the better but whether the economy has improved remains questionable, according to the Ministry of Planning and Investment.

The ministry in a report presented at a meeting on Tuesday showed that the January-September Index of Industrial Production (IIP) is up 5.4% year-on-year. Meanwhile, according to the report, power and gas consumption marked up 8.3%, with power volume consumed by the manufacturing and construction industries surging nearly 8.6% year-on-year.

At the meeting, Bui Ha, director of the Department for National Economic Issues under the ministry, said: “This year’s power consumption being higher than that in the same period in 2012 indicates manufacturing and construction and agriculture and fishery industries are recovering.”

As per the report, the country’s GDP has grown an estimated 5.14% in the first nine months, with services posting the highest growth, at 6.25%, followed by manufacturing and construction with 5.02%, and agriculture and seafood with 2.39%.

According to Ha, the nine-month export value was estimated at US$96.5 billion, increasing 15.7% year-on-year, while the nation’s import spending totaled some US$96.6 billion in the same period, soaring 15.5% year-on-year. In particular, the foreign direct investment (FDI) sector posted a trade surplus of roughly US$4 billion exclusive of crude oil exports, he said.

The report demonstrates that outstanding loans in the banking system have picked up over 6% as of this month, which is expected to continue to rise an extra 4-6% towards the year’s end. There are 872 FDI projects having been licensed in January-September with total registered capital of US$9.3 billion, leaping 35% year-on-year, while only 58,000 new companies have been established, says the report.

Still, Deputy Minister of Planning and Investment Dao Quang Thu expressed his caution towards the positive results. “There are still contradictory evaluations on the economic situation. Many say that the economy has recovered from the bottom given important indicators growing steadily month-on-month while others argue that the situation has yet to improve as the steady economic growth over the months is as normal as has been seen in previous years,” he said.

Thu posed a question to representatives of provinces at the meeting: “Is the economy improving or is it still struggling?”

A delegate from HCMC responded that the city’s government had boosted the connectivity among local commercial banks and enterprises in 24 districts citywide but only 415 companies and 600 production households took out credits totaling around VND8.7 trillion from the special program. The delegate ascribed the poor result to the fact that local firms see no need to borrow money from banks to expand production as they are sitting on a mountain of inventories.

This year’s economic growth target is 5.5% but the planning ministry has recently predicted the actual figure might be 5.3% at best.

By Tu Hoang - The Saigon Times Daily