Vietnam's economy projected to grow beyond expectation to 7.1 per cent

“Aided by able macroeconomic management, economic growth will spurt in 2018, with Vietnam becoming one of the strongest performers in the region,” said Eric Sidgwick, Asian Development Bank (ADB) Country Director for Vietnam at the press conference of Asian Development Outlook 2018 held by ADB this morning. 

According to the report, the economic performance of Vietnam in 2018 will be fairly strong expecting to reach a growth of 7.1 percent this year before reducing to 6.8 percent on 2019.

The drivers of this strong growth of Vietnam are effective manufacturing, export increase, growth in domestic consumption, strong investment incited by Foreign Direct Investment (FDI) as well as domestic firms, and an enhancing agricultural sector.

In particular, disbursed FDI rises 7.2 percent in the first quarter of 2018; export also increases significantly, especially in merchandise exports increased by 21.2 percent; the rise in consumer confidence also results in higher domestic consumption with 7.4 percent increase in private consumption more than enough to compensate for the slight temperance of public consumption; agriculture sector increased by 4 percent owing to better weather and strong export demand; manufacturing is in a strong position as well, grown by 14.4 percent due to significant export-oriented mostly from electronics, textile and telecommunication products.

As the economy grows, the inflation will increase but as long as stable monetary policies are continued and credit quality is closely controlled, the consumer price will not be fluctuated much in general.

“Many risks and challenges still exist including restoring fiscal sustainability without disrupting the economy, maintaining external balance, managing inflation level, extreme demographic shift, lack of skilled workers and increase in trade protectionism,” said Aaron Batten, Senior Country Economist of ADB.

Of all the challenges, it is vital to close the skill gaps in Vietnam for a sustainable and equitable growth. In Vietnam, qualification is still considered very important, while training quality is lacking. 

For education having access is important but having quality is even more critical. According to the report, Vietnam has an abundant supply for young workers but lacking of right skills in today more sophisticated economy.

Aaron Batten, Senior Country Economist of ADB, suggested that this issue should not only be left on the hand of the public sector as the government does not usually understand what exact skills are required in the current market. 

“Private sector should also be included as they have the knowledge of the skills required and they are also ready to finance the education sector for developing those skills,” said Eric Sidgwick, Asian Development Bank (ADB) Country Director for Vietnam.

Additionally, many people still go overseas wishing to obtain the right skills but if the curriculum in school is well-designed and well-developed, people can do just that right here in Vietnam.

It is important to have access to education, but it is even more critical to have high quality education in order to produce the right skill set.