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Vietnam to revise up 2011-2017 GDP size by 25.4%

08/28/2019 | 04:35am EST
Workers arrange a steel structure at a construction site in Hanoi

HANOI (Reuters) - Vietnam will revise up the size of its gross domestic product (GDP) by 25.4% for the 2011-2017 period, the head of General Statistics Office said on Wednesday, in a move that could impact the Communist-ruled country's strictly controlled debt ceiling.

Earlier this month, Vietnam's General Statistics Office said it was revising the way it measured GDP to meet international norms and better reflect the real size and structure of the economy.

"We have completed revising the size of the GDP for the 2011-2017 period and have submitted the revision result to Prime Minister Nguyen Xuan Phuc for approval," Nguyen Bich Lam, Director of the General Statistics Office told Reuters. "It's 25.4% higher on average."

He said the government was expected to release the revised numbers in early September.

In its statement earlier this month, the GSO said recent strong private sector growth had not been fully reflected in its statistical data, and that experts at the International Monetary Fund and the United Nations were helping the with the revision.

A revision of Vietnam's GDP size would result in changes to the structure of the economy, including a possible increase in the proportion of wealth generated by the manufacturing and construction sectors, the GSO said.

It would likely revise down the size of Vietnam's agricultural sector, the statement said.

It also said the ratio of public debt to GDP, which is nearing a mandated ceiling of 65%, will also decline, while Vietnam's contributions to international organisations to which it is a member will increase.

This could give the government, often bound by a strict adherence to not exceeding the debt ceiling, more room to raise funds for much-needed infrastructure projects.

It could, however, reduce funding from foreign aid programmes, of which Vietnam has been a key beneficiary in its post-war development.

The Southeast Asian country has one of the region's fastest-growing economies, with robust exports and foreign investment delivering average economic growth of 6.55% over the past five years.

Vietnam has been targeting annual GDP growth of 6.5%-7.0% for the 2016-2020 period, and last year it grew by 7.08%, according to the International Monetary Fund (IMF), which had put GDP at more than $240 billion in 2018.

If the 2018 total was revised upwards by 25.4% it would lift the size of Vietnam's economy to over $300 billion, significantly narrowing the gap between it and the Philippines, Southeast Asia's fifth-largest economy.

"The revision might be positive for foreign investment as Vietnam might become more attractive," said Vo Tri Thanh, a government economic advisor and director of the Hanoi-based Institute for Brand and Competitiveness Strategy.

Thanh said that Vietnam should proceed with caution, however, because the GDP revision will lead to changes to many important indicators, such as the public debt ratio to GDP and the budget deficit ratio to GDP.

"A lower ratio of public debt to GDP doesn't automatically mean that Vietnam can immediately borrow more now," Thanh said.

"The government needs to be careful".

(Reporting by Khanh Vu; Editing by James Pearson & Simon Cameron-Moore)

By Khanh Vu


ę Reuters 2019
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