The faster pace of economic growth in the first quarter from last year is not enough to say Vietnam is recovering, analysts said at a meeting of senior officials from government agencies on March 25.
The economy grew by a 3-year high of 4.96 percent in the first quarter from a year ago, above the 4.76 percent expansion in the same period last year, data released at the meeting showed.
Vietnam’s trade surplus over the first three months was the highest since 2010, estimated at US$1 billion.
However, Bui Ha of the Ministry of Investment and Planning said “no one can say that we have gotten rid of the [economic] slump, but the upward trend is clearly seen.”
He also dismissed worries about economic slowdown with inflation in January-March period being the lowest in 15 years, saying it could be that such people are used to the previous period of fast pace that ended in 2012.
Prices rose by 4.4 percent in March from a year earlier, still two times faster than the alarming level set by the EU, he said.
But Huynh Dac Thang, deputy chief of the Ministry of Industry and Trade’s Department of Planning, said Ha’s outlook on the economy was “too optimistic.”
Manufacturing inventories for the first two months rose 13.4 percent from the same period last year while consumption was up by just 4.3 percent.
High inventories and sluggish inflation reflect the ongoing low demand, he said, warning that manufacturing could decline to a “dangerous” level if the situation does not get better.
Tran Dinh Thien, head of the Vietnam Institute of Economics, told the Saigon Times online edition that a faster quarter-to-quarter growth cannot be used to infer that an economy has bottomed out and is bouncing back.
The government has managed to stabilize the economy, which is expected to grow 5.8 percent this year from 5.42 percent in 2013, but there are still bottlenecks, he said, noting that numerous businesses have been closing down.
Although the country has seen primary achievements in reducing banks’ bad debt and easing loan access, it is exposed to another potential crisis of high non-performing loan ratios since many firms are still struggling and lack the capacity to pay off debts, he said.
In the first quarter, over 16,740 businesses dissolved or temporarily halted operations, up nearly 10 percent year-on-year.
Like us on Facebook and scroll down to share your comment