Vietnam finds it hard to attain an economic expansion of 6.7% targeted for 2016 as its economy faces a large number of destabilizing factors, the Saigon Times Online quoted senior economist Truong Dinh Tuyen as saying at a workshop on June 26.
Among the troubles Vietnam is confronting are budget imbalances, swelling public debt and rising fiscal deficit, added Mr. Tuyen, who headed the Vietnamese negotiation teams for the entry into the World Trade Organization (WTO) and Trans-Pacific Partnership (TPP).
“Bad debt is not being resolved properly, with the Vietnam Asset Management Company (VAMC) lacking financial and legal resources to handle collateral in the absence of a debt market,” Mr. Tuyen noted.
The headwinds against the Vietnamese economy are causing deposit interest rates to go up across all tenors, leading to possible hikes in loan rates this year. This will weight on domestic businesses, especially small- and medium-size enterprises.
He added that the drought and saline intrusion in the Southern Central and Central Highlands region as well as the Mekong Delta will hurt crops.
Official data showed that the country’s GDP growth rate was at 5.46% in the first quarter of this year, 0.66 percentage point lower than a year earlier, due to a decline in agricultural production and a slowdown in industrial growth.
Echoing with Mr. Tuyen, Tran Dinh Thien, director of the Vietnam Institute of Economics, pointed out that Vietnam is heavily reliant on imports from China, which is a great risk.
“[Vietnam’s] industrial structure is based on outsourcing and extraction of natural resources while attention is not duly paid to production. With such external reliance, how can an industry evolve?” he raised the question.
Mr. Tuyen suggested the government focus on macroeconomic stabilization and should not take a pro-growth stance. “A GDP growth rate is 6.5% is reasonable for this year,” he said.