Economy from the first quarter of 2018: Encouraging signs

For the above reasons, since the beginning of 2018, the Government and the Prime Minister have directed all levels and sectors to seriously implement Resolution No. 01/NQ-CP on socio-economic development, striving to create a vibrant and effective production and business atmosphere right from the beginning of the year. The Prime Minister and Deputy Prime Ministers inspected and urged the work of many ministries, sectors and enterprises; attended investment promotion conferences in Phu Yen, Bac Lieu, Vinh Long, Nghe An...

Vietnam also successfully organized the 6th Greater Mekong Subregion Summit and the 10th Cambodia-Laos-Vietnam Development Triangle Summit in Hanoi. People across the country, from North to South, from lowlands to highlands, entered 2018 with enthusiasm, confidence and a spirit of hard work. Thanks to those efforts and combined strength, the country's GDP growth rate reached 7.38%, the highest in the past 10 years, with even growth in all three sectors: agriculture, forestry and fishery increased by 4.05%; industry and construction increased by 9.7%, twice as high as the same period; and services increased by 6.7%.

Macroeconomic stability, agricultural production clearly recovered, industrial production and services continued to increase, especially the processing and manufacturing industry. Financial, monetary, investment and development, business establishment, tourism services, import and export indicators, etc. all had a good increase. The average consumer price index (CPI) in the first quarter increased by 2.82%, much lower than the average of the same period (4.96%); the average core inflation in the first quarter increased by 1.32%, lower than the same period (1.69%). Interest rates and the foreign exchange market were relatively stable, exchange rates fluctuated flexibly, foreign exchange reserves continued to increase, the gold market was stable, the stock market grew strongly, the VN-Index reached over 1,170 points, up 19%, market capitalization value is estimated to increase by 16.7% compared to the end of 2017, equivalent to 82% of GDP in 2017.

Total accumulated state budget revenue by the end of March 2018 is estimated at over 308 trillion VND, equivalent to about 23.4% of the estimate, up 5.3% over the same period; State budget expenditure is estimated at 290 trillion VND, equivalent to about 19% of the estimate, up 1.7%. Total implemented social development investment capital is quite good, reaching 331.2 trillion VND, equivalent to 32.2% of GDP and up 10.4% over the same period in 2017; of which non-state capital accounts for 41.9% and increases by 16.9%, foreign investment capital accounts for 26.5% and increases by 8.1%. The investment and business environment continues to be attractive, attracting investment resources from society.

Estimated state budget investment capital reached 48.7 trillion VND, up 9.2% over the same period in 2017 (same period increased by 3.6%).

Agricultural, forestry and fishery production increased in both quantity and value, contributing positively to overall growth. Agricultural restructuring is being implemented in the right direction. Many high-value staple products are being consumed well, such as rice (up 23.8%), vegetables and fruits (up 35.6%), and cashew nuts (up 38.7%). The fishery industry has seen many improvements since the beginning of the year, with the export value of fishery products estimated to increase by 11.2%.

The industrial production index (IIP) increased sharply, reaching 11.6%, of which the processing and manufacturing industry increased by 13.9%, continuing to be the main driving force for the overall growth with key products such as electronics, computers, optical products and metal production. In particular, the mining industry in the first quarter increased again after 2 consecutive years of decline.

Total retail sales of goods and consumer service revenue in the first quarter were estimated at VND1,048 trillion, up 9.9% over the same period last year. International tourists to Vietnam were estimated at 4.2 million, up 30.9% over the same period, averaging 1.4 million per month.

Export turnover in the first quarter is estimated at 54.3 billion USD, up 22% (same period increased by 14.8%), of which, the domestic economic sector increased by 18.9%, the foreign-invested sector (including crude oil) accounted for 72.4% and increased by 23.2%; the processed industrial goods group accounted for the highest proportion in the total turnover, about 83.3% and increased by 26.3%; the agricultural, forestry and fishery products group increased by 8.4%... Import turnover in the first quarter is estimated at 53 billion USD, up 13.6%. Trade surplus is about 1.3 billion USD. Social security is guaranteed. The fields of culture, sports, education, training, science, technology... all have positive developments.

In addition to the above-mentioned highlights, the situation in the first quarter of 2018 also revealed a number of issues that need to be addressed. The traffic safety situation is complicated, the number of traffic accidents decreased by 2.9% but the number of deaths increased by 1.7% and the number of injuries increased by 18.2%. On average, 52 traffic accidents occurred per day in the first quarter, killing 24 people and injuring 14 people. The next worrying thing is the sudden increase in fires and explosions. As of March 15, 2018, there were 1,085 fires and explosions nationwide, killing 33 people and injuring 66 people, causing hundreds of billions of VND in damage. The fires and explosions occurred in apartment buildings, markets, supermarkets, and industrial parks.

Regarding the world situation, in the first quarter of 2018, the world economy maintained good growth momentum. According to forecasts of international organizations such as WB, IMF, OECD, the world economy in 2018-2019 may grow by 3.9%; leading economies such as the US, the Eurozone, Japan, China, India... all have optimistic growth rates. The global trade situation remains positive (over 4%), basic commodity prices are stable, and gasoline prices tend to increase. In addition, the world economy in 2018 also has potential risks and challenges: uncertain factors from US policy adjustments; geopolitical issues continue to develop unpredictably, with the most prominent being US-Russia, UK-Russia, EU-Russia tensions; the US-China trade war; the rising trend of populism and trade protectionism; Financial and currency risks still show signs of existence, especially in the global stock market...

From the results and lessons of the first quarter of 2018, in the coming time, sectors, localities and enterprises need to focus on successfully implementing goals and solutions.

Firstly, implement monetary policy in a cautious manner, not aiming to promote economic growth by expanding credit, prioritizing the target of stabilizing interest rates, continuing to control reasonable credit growth, closely managing consumer credit, credit for real estate, securities and household economy. Continue to consolidate fiscal policy towards restructuring the state budget and public debt, reducing bad debt, expanding the tax base, preventing tax losses, not placing too much emphasis on increasing tax rates; coordinate fiscal policy smoothly with monetary policy and other macroeconomic policies to neutralize foreign exchange, strictly manage the amount of budget money in commercial banks; operate the capital market in a more proactive direction, especially in issuing bonds that must be linked to practical needs.

Second, continue to implement a flexible and proactive exchange rate policy, and prepare effective response plans for major shocks in the world financial and monetary markets; create room and reduce pressure on exchange rate management and the monetary market in the following years. In the medium and long term, it is necessary to take advantage of a stable macro foundation to promote institutional reform, restructure the economy, improve the investment and business environment, thereby enhancing the economy's resilience to major external shocks.

Third, monitor and supervise periodically and regularly to grasp the developments of the world and domestic economy, grasp and fully exploit opportunities to promote rapid development of key areas, the driving force of economic growth, as well as make necessary adjustments when major changes occur.

Fourth, resolutely and synchronously implement three strategic breakthroughs, creating clear and substantial changes in economic restructuring associated with growth model innovation, improving growth quality, labor productivity and economic competitiveness.

Fifth, speed up the assignment of capital plans and disbursement of public investment capital; in which, priority is given to quickly disbursing outstanding debts for basic construction, repaying advanced capital, focusing on speeding up procedures related to construction, bidding, and settlement to speed up disbursement.

Sixth, focus on reviewing, rectifying, and ensuring traffic safety and fire safety, especially at key traffic points and roads where accidents often occur; strengthen inspections of fire prevention and fighting in apartment buildings, markets, supermarkets, schools, and hospitals, and strictly handle violations.

The socio-economic situation and results in the first quarter of 2018 are creating the premise for the successful implementation of the GDP growth target of 6.7% for the whole year and possibly higher. The important and long-term task of our country is to continue restructuring the economy, improving growth quality, increasing labor productivity and competitiveness of the economy, ensuring macroeconomic stability, social security, and sustainable development. It is necessary to continue to do well in directing, operating, inspecting, and urging; strongly and synchronously improving the investment and business environment; quickly removing all difficulties and obstacles for businesses and people; proactively implementing new-generation free trade agreements, especially the CPTPP Agreement, creating a new driving force for the country's economy./.