Vietnam to top 7 pct growth in 2018 and 2019

By Minh Son December 20, 2018 | 03:49 am PT

The ability to achieve such high growth in 2018 is due to large contributions from the private sector. Photo by Reuters

Vietnam may grow more than 7 percent in 2018, the highest in 10 years, and is likely to maintain the rate next year, experts say.

Nguyen Xuan Thanh, director of development, and public policy lecturer at the Fulbright University of Vietnam, said the country's economy is expected to grow at over 7 percent this year, the highest level since 2007.

"The major contributor of growth comes from industries that benefit from policies to replace import goods, such as automobile and pharmaceutical production," he said at a conference organized Thursday by the National Financial Supervisory Commission (NFSC).

In 2017, Vietnam rode on 20-30 percent growth of phones and electronics, but this year, that sector’s growth slowed down to only 11 percent in the first 11 months of 2018, Thanh explained.

He also noted that a positive aspect of the growth this year has been that it is no longer dependent on credit. The NFSC estimates credit growth to have slowed significantly to 15 percent this year from 18 percent in 2017.

"Many experts were concerned that Vietnam's high growth rate in previous years was linked to credit growth, but there has been strong economic growth this year without high credit growth," Thanh said.

Meanwhile, NFSC leaders said Vietnam's growth may exceed 7 percent in 2018 and remain at between 6.9-7.1 percent in 2019.

Truong Van Phuoc, acting chairman of the NFSC, said the high growth in 2018 is due to large contributions from the private sector. In addition, trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), which are expected to come into effect in 2019, may also bring positive impacts.

Vietnam also has the opportunity to attract investment as well as new opportunities from the field of information technology and biotechnology, he added.

But experts also point out some factors that could affect economic growth next year. Thanh noted that growth this year was not only due to investment and export but also the heavy consumption.

Any changes to consumption can have immediate effect on economic growth, he said.

In the first nine months this year, Vietnam’s GDP grew by 6.98 percent, the highest nine-month growth rate since 2011. The economy grew by 6.81 percent last year, the highest rate in a decade.