Vietnam’s economic growth
has yet to escape a short-term downward cycle that started in the third quarter of 2015 and is not likely to bottom out this year although, the National Financial Supervisory Commission (NFSC) has said in a report.
In the long run, Vietnam’s economy will remain on a positive track thanks to efforts to reform institutions and improve the business environment that will lead to enhanced national competitiveness, government-run NFSC has said in a monthly report.
However, in the short term, its growth will be dampened by cyclical factors and softer aggregate supply, stemming from drought, natural disasters and a plunge in global oil prices, the commission added.
“In order to hit the 6.7% growth goal set for 2016, [the government] needs to support the demand side to offset a fall in the aggregate supply, particularly by speeding up the disbursement of capital earmarked for development projects, achieving a credit expansion of 16%-18% and expanding export markets,” NFSC suggested.
grew 5.52% in the first half of this year, lower than a 6.28% increase in the same period of 2015, due to a slowdown of the agriculture and mining sectors, a fall in exports of farm produce and crude oil, and a weaker improvement in aggregate demand, the agency said.
The country’s budget deficit posted 85.6 trillion dong ($3.8 billion) in the first six months, or 33.7% of this year’s plan, indicating that the fiscal deficit may end up the year at 254 trillion dong ($11.3 billion) as planned.
Nevertheless, if its economy expands 6.5% this year, lower than the 6.7% target, the country’s fiscal deficit would breach the permitted cap, which is set at 4.95% of GDP, by 0.5 percentage point, NFSC warned.