Vietnam Economic Outlook 2018: Waiting for miracles

In 2017, Vietnam has successfully fulfilled all 13 targets of socio-economic development, notably 6.7% GDP growth - the highest figure recorded in almost 10 years.

The economy also witnessed a series of record numbers in many fields: import-export turnover exceeded US$400 billion; FDI capital reached US$11 billion in the first 11 months; 120,000 enterprises have been established .

In addition, that Vietnam successfully held APEC High level Week in November has helped promote the country's status in the international arena and open up more investment opportunities.

The question is whether the economy will be able to accelerate this momentum in 2018 or not due to internal challenges such as rising public debt and tight national budget.

According to Ph.D Vo Tri Thanh, former deputy director of the Central Institute for Economic Management (CIEM), Vietnam's economy is very open and will depend heavily on the global economy.

Meanwhile, the world economy is projected to expand in 2018 but not as large as in 2017. The world is also facing major risks related to geopolitical tensions and protectionism concerns.

"In 2017, we reached 6.7% GDP growth thanks to Samsung's jump in production," Thanh said.

He also noted that Vietnam's economic growth still depends heavily on some certain areas such as manufacturing, real estate and services. These sectors may continue to grow in the next year but not as strong as in 2017.

The biggest challenge, according to the expert, will come from outside, such as geopolitical risks. "The internal factors are not considered risks, but the main problem is to harmonize short-term growth and institutional restructuring," he said.

In terms of financial markets, Ph.D Truong Van Phuoc, acting chairman of the National Financial Supervisory Commission (NFSC) said that Vietnam is an export-led economy; therefore, regulatory changes between countries, unstable global financial situation, geopolitical tensions will culminate in stock market's volatility.

The market, after a period of rapid growth, will need time to accumulate capital again. However, unlike healthy businesses which will continue to be supported by the growth circle and financial cash flow, weak businesses which issue stocks rampantly without effective use will lose competitive advantage and face recession.

After an array of regulatory changes in 2018, Ph.D Vo Tri Thanh assessed that the current level of integration will facilitate not only growing middle class but also small and medium enterprises to develop further.

"Vietnam's economy has huge room for development particularly in the context of 4.0 revolution," Thanh said.