GDP growth of 5.64%: Reflecting the economic picture in the first 6 months of 2021

In the context of the COVID-19 outbreak in some localities and industrial zones, affecting socio-economic development, businesses went bankrupt, dissolved, and temporarily suspended operations up to 70,200 enterprises, but according to a recent announcement by the General Statistics Office, GDP in the first 6 months of the year still increased by 5.64%. There are many surprises, even concerns about whether there are any abnormalities in this number. How does the General Statistics Office explain this, Madam?

Director General Nguyen Thi Huong: It can be said that the COVID-19 pandemic appeared in early 2020, lasting for a year and a half now, severely affecting the production and business activities of enterprises. However, GDP in the first 6 months of the year still increased by 5.64%, making Vietnam one of the countries with a fairly high GDP growth rate, which can be explained as follows:

The first,On average, in the first 6 months of the 2017-2020 period, the number of bankrupt, dissolved, and temporarily suspended enterprises was more than 52,000. In the first 6 months of 2021 alone, about 70,000 enterprises went bankrupt, dissolved, or temporarily suspended operations. Although higher than the average of the first 6 months of the 2017-2020 period, they were mainly small and micro enterprises with capital under 10 billion VND and low resilience, contributing insignificantly to economic growth.

Rankhai,The number of newly established enterprises in the first 6 months of this year was more than 67,000, an increase of 8.1% over the same period, with a total registered capital of more than 942,000 billion VND, an increase of 34.3% over the same period last year. Newly registered foreign investment capital in the first 6 months of 2021 reached an impressive figure of 9.55 billion USD, an increase of 13.2% over the same period last year. Total realized social investment capital in the first 6 months of the year reached nearly 1,170 trillion VND, an increase of 7.2%, of which foreign direct investment capital reached more than 214,000 billion VND, an increase of 6.7% over the same period in 2020.

Photo: General Statistics Office

Rankthree,In the first 6 months of 2021, enterprises in a number of key economic sectors, especially the processing and manufacturing industry, continued to be the growth engine of the economy with an impressive growth rate of 11.42%, contributing over 50% to the overall growth rate; reflected in the estimated export value of goods (mainly goods of the processing and manufacturing industry) in the first 6 months reaching 157.63 billion USD, up 28.4%.

Rankprivate,The GDP growth rate of 5.64% in the first 6 months of this year was the lowest in the 2015-2019 period, only higher than the 1.82% rate in the first 6 months of 2020 (the first year of the COVID-19 pandemic in Vietnam).

Based on the results achieved and the transparent and thorough statistical work, we affirm that the GDP growth of 5.64% in the first 6 months of the year accurately reflects the economic picture of our country. This is a completely practical and accurate result, with nothing unusual.

To further confirm the growth figures for the first 6 months of 2021, could you please analyze more specifically the driving forces for growth?

Director General Nguyen Thi Huong:In the 5.64% growth rate of the entire economy, the agriculture, forestry and fishery sector increased by 3.82%, contributing 8.17% to the overall growth rate; the industry and construction sector increased by 8.36%, contributing 59.05%; the service sector increased by 3.96%, contributing 32.78%. Some of the results achieved by the sectors are as follows:

The agriculture, forestry and fishery sector in the first 6 months of 2021 increased significantly compared to the same period last year due to high winter-spring rice productivity, stable development of the livestock and fishery sectors, and significant increases in major agricultural and fishery products.

The processing and manufacturing industry has regained growth momentum and is the growth engine of the economy. In the first 6 months of 2021, the processing and manufacturing industry achieved a growth rate of 11.42%, much higher than the 5.06% increase in the same period in 2020, contributing more than 50% to the overall growth of the entire economy; the electricity production and distribution industry increased quite well, up nearly 8.2%, higher than the 3.5% increase in the same period last year.

Some service industries maintained growth momentum, of which, in the first 6 months of 2021, the finance-banking industry increased by nearly 9.3% over the same period; the health sector, with all resources focused on fighting the epidemic, increased by about 10.5%; in addition, some industries still had higher growth rates than in 2020 such as wholesale, retail, auto, motorcycle and motorbike repair increased by 5.63%; information and communication increased by more than 5.2%; education and training increased by nearly 6.2%.

The export and import turnover of goods in the first 6 months of 2021 grew impressively. The total export and import turnover of goods reached 317 billion USD, up 32.2% over the same period last year, a very high growth rate compared to recent years (the same period last year decreased by 1.5%), of which exports reached 157.6 billion USD, up 28.4%; import turnover reached 159 billion USD, up 36.1%. Of which, import turnover of production materials accounted for 94%.

In addition, state budget revenue in the first 6 months of 2021 is estimated at VND 775,000 billion, equal to 57.7% of the estimate, up 15.3% over the same period in 2020. Of which, revenue from production and business activities all reached over 52% of the estimate and increased over 18% over the same period.

There is information that if GDP data is based on consumption, there will not be a 5.64% growth because compared to the same period last year, consumption in the first 6 months of this year is lower, accumulation is similar and there is a trade deficit. What is your comment on this information?

Director General Nguyen Thi Huong:The United Nations Statistics Division's System of National Accounts provides three methods for compiling gross domestic product (GDP), including: the production method, the expenditure method, and the income method. Currently, the General Statistics Office is compiling and publishing GDP by production method and expenditure method on a quarterly and annual basis. GDP by income method is calculated and published every five years when there are sufficient sources of information from the census and the survey to collect information to create the inter-sectoral balance sheet.

Production method: Gross domestic product is equal to the sum of value added at basic prices of all economic sectors plus product taxes minus product subsidies;

Income method: Gross domestic product is equal to income generated from factors participating in the production process such as labor, capital, land, machinery. According to this method, gross domestic product includes 4 factors: (1) Workers' income from production (in cash and kind); (2) Production tax; (3) Depreciation of fixed assets used in production; (4) Production surplus.

Method of use (spending): GDP is the final aggregate demand of the economy, including: Final consumption (including final consumption of households and the State); asset accumulation (including accumulation of fixed, current and rare assets) and the difference between export and import of goods and services.

Quarterly and annual GDP data are compiled using two methods: the production method and the consumption method. The production method is the main method because the information collected from production is often more accurate and complete than the information on demand used to compile GDP using the consumption method.

Calculating GDP using two methods and from different sources of information (from the production side and from the consumption side) will not result in completely identical results. The result of compiling GDP from the usage method may be higher or lower than the result compiled using the production method and this difference is included in the error (according to regulations, the allowable error rate is within +/-5%).

From the supply side, Vietnam's economic growth in the first 6 months of 2021 reached 5.64%, based on a very low growth rate of only 1.82% in the same period in 2020, and many economic sectors achieved good growth compared to the same period due to taking advantage of favorable conditions in production such as: agriculture, forestry and fishery (up 3.82%); industry (except mining) still grew quite well; especially the manufacturing industry increased by 11.42%. In the service sector, many sectors also maintained good growth such as: finance, banking, insurance increased by 9.27%; health and social assistance activities increased by 10.47%; wholesale and retail; repair... increased by 5.63%.

From the demand side, final consumption increased by 3.56%, higher than the increase of nearly 0.7% in the same period in 2020; asset accumulation increased by 5.67%, higher than the increase of 1.93% in the same period in 2020; exports increased by 24.5% (same period decreased by 0.31%), imports increased by 22.76% (same period decreased by 2.5%). Thus, consumption and accumulation in the first 6 months of 2020 were lower than in the first 6 months of 2021. In addition, the total import-export turnover in the first 6 months of 2021 increased sharply, up 32.2%, of which nearly 94% of the value of imported goods were production materials, serving domestic production.

What is your forecast for economic growth from now until the end of the year?

Director General Nguyen Thi Huong: In my opinion, economic growth from now until the end of the year depends on the results of epidemic control. The General Statistics Office updated the growth results of the first 6 months of 2021 in the economic growth scenario for 2021 as follows:

Scenario 1: To achieve the 6.5% growth rate for the whole year of 2021 according to Resolution 01/NQ-CP, the growth rate in the last 6 months of the year must reach about 7.2%. This is a very difficult target in the current situation, when key economic provinces are being severely affected by the COVID-19 pandemic.

Scenario 2: For the National Assembly's target of 6.0%, the growth rate must be 6.3% in the last 6 months of the year. If the epidemic is controlled early and drastic synchronous solutions are implemented to promote economic growth, it will be possible to achieve this target.

Currently, in the face of the complicated developments of the COVID-19 pandemic, achieving the dual goal requires the participation of the entire political system; the drastic direction and management of the Government, the Prime Minister, and all levels and sectors; the joint efforts and consensus of the people nationwide, the business community and the frontline forces against the pandemic, determined to overcome all difficulties and challenges, carry out tasks and solutions to achieve the highest socio-economic development results.