Viet Nam Institute for Economic and Policy Research (VEPR) under VNU University of Economics and Business (UEB) hosted the Launching workshop of the “Quarter IV Independent Assessment of Viet Nam’s Macroeconomic Performance” in the morning of January 16th, 2019 at Sheraton Hanoi Hotel. The series of Viet Nam Quarterly Macroeconomic Reports are sponsored by Konrad-Adenauer Stiftung (KAS).
Since 2016, VEPR has begun to publish and periodically publish Quarterly Macroeconomic Reports to update and timely discuss issues that are posing to the economy. Vietnam. These seminars were commented, shared by many experts and attracted the attention of the press.
The workshop had the participation of Assoc.Prof.PhD. Nguyen Duc Thanh - Director of the Institute for Economic and Policy Research (VEPR); Assoc.Prof.PhD. Pham The Anh, Chief Economist, Institute for Economic and Policy Research (VEPR); PhD. Vo Tri Thanh, Senior Economic Expert, Former Deputy Director of the Central Institute for Economic Management; PhD. Can Van Luc, Senior Banking and Finance Expert, Director of BIDV Training and Research Institute of Investment and Development of BIDV; Mr. Nguyen Tri Hieu, Senior Economist and press agency representative.
Assoc.Prof.PhD. Nguyen Anh Thu, Vice-Rector of VNU University of Economics and Business, delivered the opening speech
Opening the seminar, Assoc.Prof.PhD. Nguyen Anh Thu made a welcome speech to the guests attending the seminar. She highly appreciated the efforts that the VEPR team has devoted to developing Quarterly Economic Reports over the past time, as well as expressing hope for a Vietnam economic situation that continues to prosper in 2020.
Mr. Peter Girke, Representative of Konrad Institute - Adenauer Stiftung (KAS)
Mr. Peter Girke, Representative of Konrad Institute - Adenauer Stiftung (KAS) Vietnam also made a welcome speech to the guests attending the seminar. Mr. Peter is very interested in Vietnam's economic situation in the fourth quarter and the whole of 2019.
Assoc.Prof.PhD. Pham The Anh presented the content of the report
Next, Assoc.Prof.PhD. Pham The Anh presented the content of the report. He said that, in the context of the world having many economic and political fluctuations, Vietnam's economy in the fourth quarter of 2019 only grew at 6.97%, lower than in 2018.
“Inflation increased sharply in the year-end period due to the increase in food prices because of declining livestock activities. This is a major concern of the economy in the fourth quarter of this year. In general, compared to the same period last year, Vietnam's economy faced many less positive developments,” Mr. The Anh commented.
According to VEPR Chief Economist Pham The Anh, Vietnam's economic growth rate for the whole year of 2019 reached 7.02%, although lower than the growth rate in 2018 but still a bright spot in the region and the world. .
Forecasting the growth rate as well as the inflation rate in 2020 according to the socio-economic development plan issued by the National Assembly, VEPR research team thinks that the goals of 2020 are possible gain. However, Vietnam will need a lot of efforts to achieve the 6.8% growth target and inflation below 4% due to political instability in the world which has a significant impact on the domestic economy. The research team forecasts that the first quarter 2020 economic growth will be at 6.33%; The second quarter stood at 6.27%; The third quarter at 6.58%; Fourth quarter stood at 6.64% and growth for the whole 2020 was only 6.48%. Similarly, the inflation rate in the 2019 quarters was at 4.88%; 4.49%; 4.13% and 4.04%. Along with that, VEPR also forecasts that the long-term economic prospect of Vietnam will depend on FDI with the result of removing institutional barriers, improving the business environment and equitizing state-owned enterprises. International trade and investment activities are expected to prosper after the signing of free trade agreements such as CPTPP and EVFTA. However, Vietnam also needs to be cautious in international trade relations. The treatment of nations in international trade is one of Vietnam's major problems in 2020.
Discussion session of the seminar
After Assoc.Prof.PhD. Pham The Anh presented the content of the report, the discussion came to a discussion session organized by Assoc.Prof.PhD. Nguyen Duc Thanh chaired and operated.
Assoc.Prof. Nguyen Duc Thanh, Director of the UEB Vietnam Institude for Economic and Policy Research in the discussion
According to Assoc.Prof.PhD. Nguyen Duc Thanh - Director of VEPR, although the Vietnamese economy is impressed with the bright spots in 2019 and is considered more optimistic by international organizations than the world in 2020, but the number increases. The 6.8% growth set by the Government for 2020 is an optimistic, ambitious and not easy to implement.
He said the treatment of nations in international trade. Citing China to become a major import market while the US is Vietnam's largest export partner, Thanh warned: "The US is a very clever and tough partner in international trade, Vietnam. be careful not to become a backyard for China and Korea to export to the US". He cited the fact that steel is taxed to more than 400% in 2019, which raises the origin issues of Vietnamese goods.
In the past year, Vietnam has become one of the 7 partners with the most exports to the US. But with increasing foreign exchange reserves, Vietnam is on the list of US currency manipulation watch. This requires the State Bank to be careful in operating monetary policy, flexibly and objectively.
Proposing a solution to this problem, PhD. Can Van Luc said that Vietnam continues to implement foreign exchange reserves but not one way but towards buying, selling and not intervening continuously for 6/12 months. At the same time, do not use exchange rate tools to increase foreign trade, because if Vietnam intentionally devalues its currency to boost exports, the US will be listed on the above list. PhD. Can Van Luc also raised the challenge of institutional reform, especially institutions for the digital economy too slowly. “Decrees for new business models such as Fintech and peer-to-peer lending are not yet available. The slow adjustment of institutions will lose opportunities in the digital economy” Mr. Luc emphasized.
Sharing at the seminar, PhD. Vo Tri Thanh said that many foreign experts highly appreciate the economic growth that Vietnam has achieved in 2019, especially in the context of the global economy has many fluctuations and challenges. The economist also pointed out what has not been achieved. “In 2019, in Resolution 01 there is the word“ breakthrough ”. If we look at this word, we have not yet reached. The issue of sustainable growth becomes painful, the story is not only a measure of pollution but also a policy, strategy, rapid response mechanism, including in the media. If talking about reform breakthrough, the business environment is far from required. Divestment, equitization very slowly. Innovation has many problems ”- Mr. Thanh said. According to PhD. Vo Tri Thanh, a bright spot in 2019 from the banking industry, step by step gaining Basel 2 standards, resolving bad debts has made remarkable strides. Review of VEPR macroeconomic reports for the fourth and the whole of 2019, experts, PhD. Vo Tri Thanh said that regardless of the figures, Vietnam's economic growth in 2019 is still impressive in the current context. Going along with that, PhD. Vo Tri Thanh also noted, in 2019, Vietnam is one of the 7 largest export partners to the US, with foreign exchange reserves increasing to more than 71 billion USD. This also means that Vietnam is in danger of being accused of US currency manipulation. Therefore, PhD. Vo Tri Thanh recommends that the State Bank be careful in operating monetary policy, flexibly and objectively.
Contributing mainly to the growth rate are the two industrial, construction and service sectors with prominent growths in manufacturing, manufacturing, distribution, electricity and construction and construction. Along with that, the mining industry also had a slight growth after 3 consecutive years of decline. Notably, the agricultural, forestry and fishery sector in 2019 encountered many adverse factors from the weather and African pig cholera outbreak and the shrinking of export markets but still growing at level 2, 01% with an impressive growth of over 6% in the fishery industry. In 2019, the service sector grew higher than 2019 with a fairly uniform growth with the majority at over 7% in the finance, banking and insurance, wholesale, retail and transportation sectors. Warehouse. The growth of public sector investment capital is low, while the growth of the private and FDI sectors is high and the disbursement rate is high. US-China trade tensions have led to a rapid growth of capital flows from China but could entail environmental risks and foreign labor management. Inflation is below the 4% threshold but the escalation of CPI in December exceeding the 5% threshold will potentially cause many concerns for quarters in 2020. “By the end of 2019, the PMI has marked the 49-month series. Continuous expansion of production area. This proves that businesses' belief in production is unchanged, they still expect production to continue to expand in the new years. That is a positive prospect of the manufacturing sector in particular and the economy in general in the near future”, Assoc.Prof.PhD. Pham The Anh said.
Recalling the WB's message "the sun is shining in Vietnam". PhD. Nguyen Tri Hieu - an economist, gave an overview of Vietnam's economic growth.
Accordingly, in 2019, Vietnam's inflation index grew by 2.76%, GDP grew by 7.02% - corresponding to a scale of over 300 billion USD, trade surplus reached 10 billion USD, the amount of remittances poured in. about Vietnam reached 6.7 billion USD, ranking global competitiveness up 10 levels according to the WEF rating ... "The sun is still sunny in Vietnam, while outside the war, the sky is over. dark. I personally think the sun shines, but does that light reach all of us or does it only shine on some components? ”, PhD. Nguyen Tri Hieu asked questions. He then cited a series of data showing the dark points in Vietnam's socio-economic picture in 2019. “According to the old IMF calculation, the size of Vietnam's GDP ranked only 146/211 countries. In ASEAN, we stand below Singapore, Thailand, Malaysia ... Even, the Philippines is ranked above Vietnam. We just stand on Laos, Cambodia, Myanmar. And Vietnam's GDP per capita is 2,698 USD, a very low number in the world. In the region only higher than Cambodia and Myanmar. GDP growth of more than 7%, GDP scale of more than 300 billion USD is all good, but for each individual Vietnamese, we are still in the low-middle income group. Wanting to move up to the high-middle income group, the path of Vietnam is still long, we are still in the middle-income trap ", PhD. Nguyen Tri Hieu commented.
Another issue that concerns Mr. Hieu is that Vietnam's credit rating according to Moody's, Fitch, Standard & Poors ratings is still at non-investment grade speculative - not in the group that should / encourage investment, speculative , high risk. PhD. Nguyen Tri Hieu commented: “Vietnam's bonds are in the group of junk bonds. And Moody's also lowered Vietnam's credit rating outlook from positive to negative. This means that in the future, if Vietnam does not change, our rankings will continue to decrease. Such a low credit score will cause economic sectors, including banks, to not achieve higher levels of national credit scores. Therefore, foreign investors will consider and evaluate more before deciding to invest in Vietnam.
Further analysis of Vietnam's GDP per capita, Assoc.Prof.PhD. Nguyen Thuong Lang, lecturer at the National Economics University, commented: “Vietnamese people, why do they don't get rich? As Vietnam's GDP per capita is increasing, GNP is declining day by day. And foreigners who come to Vietnam are richer. It shows that we are opening the door, giving too much favor to foreign countries, helping them benefit. This is the issue we need to consider. ” Another issue was Assoc.Prof.PhD. Nguyen Thuong Lang pointed out that the crisis cycle of Vietnam Real Estate. “In the period of 1997 - 1998, Vietnam had a real estate crisis, the period of 2008-2009, then 2019, too. Thus, the cyclical in times of real estate crisis in Vietnam is very clear. Should the government have anti-cycle policies? ”. Assoc.Prof.PhD. Nguyen Thuong Lang asked questions.
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