MAXIMISING THREE DRIVING FORCES FOR GROWTH AMIDST WORLD TURBULENCE

The Party, State and Government took drastic measures to spur economic growth, as well as stabilise and improve people’s livelihoods. 

Although the global economy suffered from high inflation, high input costs and prolonged conflicts in 2023, Vietnam has successfully navigated the challenges and carved out a solid recovery. 

Next year, investment, export and consumption will be the three driving forces that help Vietnam achieve the growth target of 6-6.5%, according to the Ministry of Trade. In 2023, the global economy experienced more pain than expected, with the US Federal Reserve and central banks increasing interest rates to curb inflation, the prolonged Russia-Ukraine war, and the Gaza conflict which resulted in a fall in global demand. 

Despite the fact that the COVID-19 pandemic is under control, its lingering impacts have deeply affected the global economy and the Vietnamese economy in particular, according to Director of the Central Institute for Economic Management (CIEM) Tran Hong Minh. 

As one of the most open economies in the world, Vietnam felt the pinch in the first quarter of 2023. The gross domestic product (GDP) growth during January – March slowed to 3.32% year-on-year, the second lowest rate in 13 years. GDP in the first half of the year only inched up 0.4% to 3.72%, as compared to 6.42% of the same time in 2022. 

However, in the context of the global downward trend, the figures reflected great efforts of the entire political system, the people and the business communities. 

The Party, State and Government took drastic measures to spur economic growth, as well as stabilise and improve people’s livelihoods. 

Hundreds of decrees, resolutions and decisions were issued during January – November. The highlights included policies on reduction of lending interest rates, stabilisation of the foreign exchange market, acceleration of public investment, implementation of credit packages to support enterprises, tax and land-use fee cut and extension of payment deadlines, and visa relaxation for visitors.

Additionally, an array of external and international integration activities were effectively carried out by the Government, particularly the implementation of high-level agreements. 

Thanks to the resolve of the whole political system, the Vietnamese economy enjoyed sound recovery, and carved out significant achievements across various areas. 

The GDP growth rate in Q3 was 5.33% year on year, and the rate for the first nine months stood at 4.24%, one of the high rates in the region and the world.   

According to Prime Minister Pham Minh Chinh, in the 11-month period, the macro-economy stabilised, the inflation rate was curbed at around 3.22%, while major balances were ensured, and industrial production maintained good recovery. 
He described public debt, foreign debt and budget overspending as under control and capital reserves are available, which are important factors to fuel economic growth. 

Revving up growth in 2024

Investment, export and consumption have huge opportunities to develop in 2024, according to the Ministry of Planning and Investment. 

Vietnam may record a GDP growth rate of 5.19% in 2023, lower than the 8.02% expansion in 2022 but still higher than many other countries in the region and the world, CIEM experts have said.  

Fitch Ratings predicted the Vietnamese economy will expand 6.3% in 2024 and 7% in 2025 on the back of the domestic fiscal and monetary policies. 

Meanwhile, the Asian Development Bank (ADB) and the International Monetary Fund (IMF) forecast the country’s GDP growth next year at 6% and 5.8%, respectively. 

Under a resolution on socio-economic development adopted at the sixth session of the 15th National Assembly, Vietnam targets 6-6.5% in GDP growth in 2024. 

With a view to realising the set goal, the Ministry of Planning and Investment proposed the Government to sharpen focus on investment, export and consumption, saying they are locomotive for the economy next year. 

Exports have gained momentum, consumption has enjoyed double-digit expansion in the last months of 2023, the ministry said, relishing prospects for numerous investment opportunities in new areas such as renewable energy and semiconductors next year thanks to the fruitful outcomes of the economic diplomacy in 2023. 

According to UNDP Resident Representative in Vietnam Ramla Khalidi, Vietnam should pen flexible measures to handle current challenges so as to better recover in 2024. 

She elaborated that innovation and energy transition have brought new opportunities for Vietnam to break into new markets, increase products value as well as promote exports. 

It is necessary to enhance investment attraction and capitalise on advanced technologies such as semiconductors and artificial intelligence to develop and escape the middle-income trap./.