Numerous growth dynamics
Vietnam’s gross domestic product expanded 7.02 percent last year, fueled by a robust expansion of the processing and manufacturing sector and service sector, according to the General Statistics Office (GSO). This is the second consecutive year since 2011 that Vietnam’s economic growth has reached over 7 percent. This was a stunning result as it exceeded the National Assembly’s target of 6.6-6.8 percent – set at the beginning of the year.
Processing and manufacturing was the pillar of growth, rising 11.29 percent, the highest level in the last seven years. Expanding 8.9 percent and 7.3 percent, the industrial and construction sector and the service industry contributed 50.4 percent and 45 percent, respectively, of GDP growth. The service industry saw the contributions of wholesale and retail sales, finance-banking and insurance, accommodation and restaurants, transportation and warehouse and property. The agro-forestry-fishery sector picked up 2.01 percent, contributing 4.6 percent of GDP growth, which was already lowered down by drought and climate change that affected crop output. Livestock industry was severely damaged by African swine fever.
Lowest CPI inflation in 3 years
The average consumer price index (CPI) this year expanded by 2.79 percent over 2018, the lowest pace over the past three years, GSO announced. That being said, the target of curbing inflation and keeping the CPI in 2019 below 4 percent was well achievable.
However, in December alone, CPI rose by 1.4 percent from the previous month, the highest level for December’s CPI growth rate in the last 9 years.
December’s CPI is also reported an increase of 5.23 percent compared to the same period last year.
The General Statistics Office (GSO) attributed CPI hike in December to the rising price of pork and pork products after the declining supply caused by the African swine fever crisis.
In December, nine of 11 groups of consumer goods and services have seen prices rise. These include food and catering services; beverages and tobacco; housing and construction materials; clothing, hats and footwear; household appliances; medicines and healthcare services; education; and culture, entertainment and tourism.
The only group of goods witnessing declines was post and telecommunications.
As long as the whole year is concerned, this year’s CPI hike was driven by higher prices of medical services, which climbed up 4.56 percent in line with the Health Ministry’s Circular 13/2019/TT-BYT dated July, 5 2019.
CPI’s growth was also attributed to the rise of electricity prices which were adjusted up from March 20, 2019 under the Ministry of Industry and Trade’s Decision No 648/QD-BCT. Higher demand for electricity during the Lunar New Year 2018 and hot weather in the second quarter and third quarter this year have made the prices of electricity jump by 8.38 percent in 2019 compared to 2018.
Higher tuition fees, an increase in the regional minimum wage, plus higher prices of food, public transport services, and oil and gas products also contributed to the CPI rise.
According to the GSO, this year’s basic inflation (CPI exclusive of foodstuff, fresh food, energy, healthcare and education services) rose 2.01 percent over the previous year.