The nation’s gross domestic product (GDP) is forecast to grow by 4.8
percent during the second quarter of the year, lower than the previous
quarter.
According to a recent report by the National Centre for
Socio-Economic Information and Forecast (NCEIF), many economic
challenges highlighted during the first quarter would continue to hinder
an economic recovery in the coming time.
Prospects for a global
economic recovery were still limited while the domestic economy was
still grappling with difficulties relating to bad debts and a lack of
capital for businesses along with falling purchasing power.
Industrial production was low and high inventories continued to pose a
headache, with the food sector seeing a growth rate of only 3.1 percent
in comparison with 11.8 percent during the same period last year.
The stagnant real estate market also had a negative impact on
production of raw materials, steel and cement, with the mining sector
also seeing slow growth of 3.8 percent.
Export growth relied
largely on foreign investment with the FDI sector running a trade
surplus of nearly 1.31 billion USD, a figure that helped improve the
country’s overall trade balance.
Statistics showed that the FDI
sector’s exports were valued at 19.2 billion USD, accounting for more
than 60 percent of the country’s total export turnover and representing a
rise of 25.6 percent over the same period last year. The sector’s
imports accounted for 55 percent of total import turnover, at 16.1
billion USD.
According to NCEIF, foreign direct investment inflow was decreasing.
Although the first quarter of this year saw inflow of FDI capital
account for 26.16 percent of total capital of all kinds into the
country, a rise of 1.37 percent over the same period last year, it
decreased by 6.33 and 2.7 percent in comparison with the first quarter
of 2010 and 2011, respectively.
The country’s budget deficit was
at about 35.6 trillion USD in the first quarter due to low revenues.
Statistics showed that as of January 15, total State revenue was
estimated at 16.7 percent of targeted revenue for the full year, a
record low since 2008.
Loan interest rates remained high (at an
average of 14 percent) with low credit growth, and a high rate of
non-performing debts (estimated at 6 percent), especially in the real
estate sector.
These statistics reflected the economy’s low
capital absorbency, creating the paradox of an abundance of cash despite
enterprises’ great need for capital, and playing a major role in the
low economic growth rate during the first quarter, according to the
NCEIF.
The centre said in its report that while many Government
policies had been issued in a timely manner, many were not practical or
had not been effectively implemented.
The implementation of
Government Resolution No 01/NQ-CP and Resolution 02/NQ-CP on tackling
production difficulties and resolving bad debts held by businesses
remained slow, hindering economic recovery.
The centre called for
implementation of these policies to be sped up and their practicality
ensured to stabilise the economy and recover production, adding that
inappropriate resolutions should be amended or eliminated to enhance
efficiency.
Problems related to bad debts and credit needed to be
tackled while measures to boost purchasing power had to be taken to
help ensure capital sources for enterprises.
“Falling consumption
is one of the causes for the stagnant economy, creating difficulties
for enterprises. Measures to accelerate demand, such as price cuts, job
creation and salary increases, are necessary for the economy to
recover,” the report said.
The centre forecast a GDP growth rate
of 4.8 percent for the second quarter of the year while the consumer
price index (CPI) would rise at a rate of 3.2 percent over December last
year.-VNA