Vietnam downgrades growth forecast

The Mekong Delta: Vietnam’s rice bowl. Source: Flickr

Vietnam’s gross domestic product (GDP) projection for 2016 has been reassessed and is now far lower than that for 2015. Natural disasters had pulled down agricultural, forestry and fishery production, the minister for planning and investment admitted.

Minister Bui Quang Vinh said if the problems were not resolved, growth rates would fall to 5.45 per cent this year, while the 2015 rate was 6 per cent. The National Assembly of Vietnam had estimated that the economy would grow at 6.7 per cent this year.

In the first quarter, Vietnam grew at around 5.46 per cent, down from the 6.12 per cent for the same period last year.

“Cold spells in the north, drought… had a major impact on domestic production, especially agriculture, industry and exports during the period,” Vietnam’s General Statistics Office (GSO) director Nguyen Bich Lam was quoted saying by the official VietnamPlus news website.

The official Vietnamese news agency, VNA, blamed the drought and saline intrusion.

Plummeting global oil prices have also reduced growth, affecting the country’s crude oil profits, said independent economist Le Dang Doanh.

“The price of the global crude oil, a lengthy holiday for Lunar New Year [last month] and a slide in the price of agricultural products” had all affected growth, he said.

Crude oil exports have accounted for around 10 per cent of state income in the past.

Inflation rose in the first quarter, by 1.25 per cent against last year, the GSO said.

Earlier this week, Hanoi said it was aiming for growth of between 6.5 and 7 per cent by the end of the year.

“If there are no further efforts on economic reforms, the government may not be able to meet the set target,” economist Doanh said. The drought in central and southern Vietnam meant that Mekong Delta region rice production, the country’s so-called rice bowl, fell by 700,000 tonnes compared to last year.

Agricultural, forestry and fishery growth was likely to decline by 1.23 per cent in the first quarter year-on-year, the GSO said.

Prime Minister Nguyen Tan Dung has called his cabinet members to address the crisis, counteract climate change and speed up relief aid.