GDP growth target out of reach, says economist
By Thanh Thuong - The Saigon Times Daily
HCMC – With the current macroeconomic uncertainties, it is impossible for the country to achieve this year’s GDP growth target of 6-6.5%, said Tran Hoang Ngan, member of the National Assembly Economic Committee.
According to the latest report by the General Statistics Office, the national GDP grew at 4.38% in January-June year-on-year. The report said the low GDP growth is due to stagnant production and snowballing inventories at local producers.
Ngan, who is also vice rector of the HCMC Economics University, told the Daily that it is unlikely that the nation will realize the target of GDP growth this year.
He insists decreased investment at home is the main reason behind the current tough situation since investment capital is the decisive driving force for economic growth.
As such, the country for the rest of the year will have to make all-out efforts to reach its GDP growth target, Ngan said. But it is difficult for the nation to do that.
Another reason is that the number of local enterprises going bust is rising, with over 26,000 firms dissolving and halting operations in the year’s first half, up 5.4% from the previous year.
According to Ngan, inflation has been falling thanks to the Government’s efforts so far, but it is still too soon for the nation to loosen monetary and fiscal policies to boost economic growth. What the country needs to do now is to accept moderate inflation and growth or it may face the recurrence of high inflation as in previous years.
Ngan proposed the root causes of the present economic slump must be addressed by the end of the year, including ineffective public investment, poor performance of State-owned groups, ambiguous management mechanism, troublesome procedures and loose financial management. He also suggested bad debts in the banking system must be tackled as it is vital that the economy is healthier in years to come.
Despite slowing CPI growth, he predicted the recent power, water and coal prices hikes will push up input costs of manufacturers, which will have an effect on inflation in the near future.