Việt Nam’s gross domestic product (GDP) grew by 5.46 per cent in the first quarter, slower than the 6.12 per cent during the same period last year, the General Statistics Office (GSO) announced this week.
There were signs of GDP stagnation although Q1 is the first quarter to implement the socio-economic development plan for 2016-2020. Vietnam Television asked the economic expert Vũ Đình Ánh whether the figure affects the target GDP growth rate of 6.7 per cent as set for this year by the government.
Late last year, we were optimistic when looking forward to 2016 as it is the start of a new economic cycle. However, the Q1 growth rate shows stagnation. Are you surprised about this?
Vũ Đình Ánh. — File Photo
In fact I am really surprised. The GDP growth rate of Việt Nam’s economy reached a record high of 6.68 per cent in 2015, higher than the national expected target, and the GDP growth in a quarter was always higher than the previous quarter.
Therefore, I am very surprised that national GDP growth has slowed to 5.46 per cent in the first quarter, much slower than the same period last year. This stagnation will have a great impact on the target GDP growth rate for the whole year.
What is the impact of the Q1 GDP on the whole year’s GDP growth, especially as this is the first year of the country’s five-year socio-economic development plan for 2016-2020?
I can say that the role of the first quarter in a year is very important because this is the beginning quarter.
Economic growth in the first quarter is sure to affect economic development targets for the whole year. If GDP growth starts at this low level, we will face many challenges in reaching the economic growth targets for the year.
For instance, if Việt Nam sets the GDP growth target for this year to at least match the 2015 growth rate, it will be very difficult to reach the target when the first quarter had a slow growth rate. More over, Việt Nam expects to gain a high GDP growth rate of 6.5-7 per cent for the five-year economic plan during the 2016-20 period, while the initial quarter of the first year under this period has shown a low economic growth rate.
The government should analyse the reasons behind the low economic growth rate so as to have solutions to promote domestic economic development by the end of this year and beyond.
The General Statistics Office (GSO) has listed some reasons for the slow GDP growth rate in the first quarter, including a reduction in GDP from farming. This is the first time the GDP of the farming industry has shrunk against the same period last year. Last year, the GDP growth rate of the agricultural industry reached 2.25 per cent year on year. Can you suggest other reasons?
The agricultural industry has played an important role in contributing to the national GDP and also in the surge of national export value. However, in recent years it has accounted only for 10 per cent of the total GDP in Việt Nam, where as years ago it was 20 per cent. Therefore, other industries have contributed to the slow national GDP growth rate in the first quarter.
The GDP of the agricultural industry in the first quarter was reduced by 1.23 per cent year on year, bringing the local economy’s GDP down by 0.16 per cent, so this industry is one contributor to the low GDP growth rate. The GDP of other industries have also contributed to the slow national GDP growth rate.
For instance, the GDP of the industrial sector was two thirds the growth rate of the same period last year. The GDP of the mining industry shrunk by 4 per cent year on year, while the GDP of the processing and manufacturing industry that accounts for 70 per cent of the industrial field’s total production value reached only two thirds the growth rate of the same period last year.
Two other important fields that have a large contribution to GDP growth are export value and the total retail value of goods and services. In the first quarter of this year, the total export value had a low growth rate of 4.1 per cent, and growth for the total retail value of goods and services was at four fifths of the growth rate in the same period last year.
I think that the slow growth in GDP of the first quarter is related to the agricultural, industrial and export fields.
The construction and tourism industries had high growth rates in the first quarter. Do you think the State should focus on those industries to boost GDP growth by the end of this year?
It is difficult to do that because the construction industry does not account for a large percentage of the total GDP, though the industry had a GDP growth rate of 10 per cent in the first quarter, and the local property market has shown signs of recovery. The GDP of the construction industry is smaller than the agricultural industry’s GDP.
In Việt Nam, the service field has contributed a large percentage to the total GDP, followed by industry. However, I think to promote total GDP growth, the State should focus on the development of the processing and manufacturing industries. — VNS