Illustrative image (Photo: Vietnam+)
Hanoi (VNA) - In its “Vietnam Macro Monitoring” report in September, the WB suggested Vietnam focus on improving the business climate and stepping up investment in human capital to attract high-tech and high-value-addition FDI as well as boost productivity in the long run.
According to a report released by the World Bank (WB) on October 20. Vietnam’s economy registered 5.3% year-on-year growth in Q3 compared with 4.1% year-on-year in Q2, due to a gradual recovery of industrial production, reflecting improvement in exports.
Industrial production recovered
In the third quarter, the services and agricultural sectors grew by 6.2% and 3.7% year-on-year, respectively. They contributed 2.7 and 0.4 % percentage point to GDP growth in the period. The growth rates and contributions are comparable to the previous two quarters.
Tourists visit Hanoi's Old Quarter. (Photo: Vietnam+)
Following ten months of contraction, exports and imports grew 5.3% and 2.6% year-on-year in September. This is a vivid illustration for an improvement in external demand, suggesting the contraction in merchandise trade as bottomed out.
It helped narrow the contractions in exports and imports in Q3 to -1.2 % and -5.0 % year-on-year, respectively, compared with -12.2 % and -20.6% in Q2. The improvement was evident in exports of agricultural products such as rice, textile weaving, electronics and computers.
The overall merchandise trade balance registered a surplus of 2.3 billion USD in September 2023 and 21.4 billion USD for the first nine months of the year as exports have been contracting less than imports. Also, imports are recovering faster than exports, signaling businesses are expecting further expansion of production. Between April and September 2023, monthly growth rates for exports improved from -16.2% to 5.3%, while those for imports improved from -23.1% to 2.6%.
According to S&P Global PMI survey for Vietnam, the number of exports orders picked up in both August and September, especially from Asian markets.
Focus should be sharpened on inflation and public investment
Vietnam should closely monitor inflation which has been on the rise in recent time, according to the World Bank.
In its “Vietnam Macro Monitoring” report in September, the WB said the consumer price index (CPI) grew from 3% in August to 3.7% in September, continuing a sharp upward trend that started in June.
Inflation was due to higher prices of food and foodstuffs as well as housing and construction materials. Additionally, the price of transport services contributed 0.3 percentage point to CPI inflation due to the new round of oil price increases registered during July-September this year.
In stark contrast, core inflation which excludes food, fuels and government administered prices, continued to soften from 4% in August to 3.8% in September.
Credit growth accelerated from 16.2% in August to 17.2% in September as the State Bank of Vietnam raised credit growth limits on some commercial banks.
With strong demand for credit, average overnight interbank interest rate rose from 3.5% in August, reaching 5.48% in mid-October, the highest since 2013.
The budget balance posted a 0.5 billion USD deficit in September for the first time in 2022, but still registered a 10.5 billion USD surplus over the first 9 months of the year. Given the budget surplus, year-to-date government bond issuance reached only 28.7 % of annual plan, compared to 67.9% in 2021.
Disbursement for public investment is still slow. (Photo: Vietnam+)
Vietnam’s economy picked up in Q3 thanks to a gradual recovery of the exports, however, domestic consumption remained subdued and credit growth continued to be slow, which reflect weak private domestic investment and investors’ confidence.
The WB said a strategic and well-prepared investment pipeline for 2024, and the next Medium-term Investment Plan (MTIP) with a focus on green, resilient and regional infrastructure will help bolster long-term economic development./.
