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Planning Ministry projects higher economics goals for 2010

Date: 8/5/2009 9:03:34 AM

Draft Government socio-economic scenarios for 2010 are based on an increasingly firm belief that the global economy will recover and this will give a strong push to Vietnam’s national economy will be better off together with the recovery of the world’s economy.

Planning Ministry projects higher economics goals for 2010.

Deputy Minister of Planning and Investment Cao Viet Sinh said that his ministry is projecting expected growth in production (GDP) of 6.5-7 percent in the first draft of the socio-economic development plan for 2010.

“This is just an indicative number, but I think that we have every reason to believe that the target is within our reach,” Sinh said.

The Ministry of Planning and Investment (MPI) scenario foresees Vietnam’s GDP in current prices reaching 1,960-1,970 trillion dong, or $108 billion, in 2010, and per capita income rising to $1,220. The value of agricultural, forestry and fisheries production is expected to increase by 3-3.4 percent, production in the industry and construction sectors to increase by 7-7.5 percent in value, and in the service sector by 7.8-8.3 percent.

Meanwhile, total export revenues are expected to be six percent more than in 2009, while total investment capital for development will account for 40.7 percent of GDP.

The first draft of the socio-economic development plan proposes that the rise in the consumer price index (CPI) will be held to less than 10 percent, the same target for 2009. This may be a difficult target in view of the substantial expansion of the money supply and credit to fight recession during the first half of 2009 .

Most of the macroeconomic goals for 2010 embody optimism about economic performance to the end of this year. Sinh said that recent forecasts by international institutions are unanimous that the world economy will escape from crisis in 2010 to enter a more stable period.

“Though research institutions here and abroad have lots of different opinions, they all see a good chance the world economy will begin recovering in late 2009 or early 2010, and that 2010 will see positive changes,” Sinh said.

According to the World Bank, the global growth rate will increase from minus 2.9 percent in 2009 to plus two percent in 2010. Meanwhile, the International Monetary Fund (IMF) predicts the a global 2.4 percent increase thanks to the improvement in big economies like the US, Europe, Japan, China and India.

“Together with the economic recovery, trade and investment activities will also recover and develop, creating favourable conditions for Vietnam’s exports,” Sinh said.

A Nomura International forecast released on July 31 also said that Vietnam is no longer in crisis and is likely to see the GDP rise by 6.4 percent in 2010.

Nomura based its forecast for Vietnam particularly on the increase in the public investment in infrastructure, and the recovery of private sector investment in the context of ample bank credit, said Sonal Varma, a Nomura analyst.

Ms. Varna also pointed to higher domestic consumption thanks to the Government demand stimulus package, the scant negative impacts felt by Vietnam’s agriculture sector and the aforementioned general economic recovery as reasons that help people believe in the feasibility of the projected 6.4 percent growth rate.

Ken Arakawa, a foreign investment consultant for the Japan External Trade Organisation (JETRO), agreed with the scenario, and predicted that Vietnam will grow at 6.4 percent “or better.”

Vietnamese businessmen also think that the MPI scenario is feasible, but warn against over-optimism. “Vietnam’s GDP in 2010 will be surely higher than that of 2008, but in the 5.5 to six percent range only, provided that the demand stimulus package will continue with no obstacle,” said Nguyen Hai Ha, a deputy general director of Hanoi Fund Management Company.

Ha doesn’t put much faith in the strong recovery of exports or foreign direct investment in 2010.

MPI has circulated the draft document for comment. It will consider these before it submits its scenario officially to the Government in late August.

Socio-economic goals for 2010 proposed in MPI’s draft