ADB maintains growth projection for VN at 6 percent in 2024 on sizeable public investment
Bikes produced at Thống Nhất Company. The Vietnamese economy is expected to grow at a solid pace this year and the next, despite a challenging global environment. — VNA/VNS Photo Trần Việt |
HÀ NỘI — The Vietnamese economy is expected to grow at 6 per cent in 2024 and 6.2 per cent in 2025 on fiscal policies and sizeable public investment, according to the Asia Development Outlook April released by the Asian Development Bank (ADB) on Thursday.
Despite lingering uncertainties in the external environment, the ADB maintained its earlier growth projection for Việt Nam, pointing out that a relatively broad-based restoration in export-led manufacturing and services, as well as stable performance of the agriculture sector are expected to support the recovery momentum.
“Positive inflows of foreign direct investment (FDI) and remittances, a sustained trade surplus, recoveries in domestic consumption, and continued fiscal stimulus characterised by substantial public investment are seen as key to boosting growth in 2024,” the report wrote.
Inflation will edge up at 4 per cent for 2024 and 2025 in tandem with the economic revival.
“Việt Nam’s economy is expected to grow at a solid pace this year and the next, despite a challenging global environment,” said ADB Country Director for Việt Nam Shantanu Chakraborty.
If these growth rates are achieved, Việt Nam will be among the fastest growing economies in the region, he said.
“However, global geopolitical uncertainties and domestic structural fragilities could impact the outlook. Therefore, policy measures in 2024 will need to combine short-term growth support measures to strengthen domestic demand with long-term structural remedies to promote sustainable growth.”
Key for growth
Limited monetary policy space, fiscal and investment spending will be key for growth in 2024, said Nguyễn Bá Hùng, Principal Country Economist.
“A comfortable fiscal position with a mild budget deficit and a low public debt-to-GDP ratio provides sufficient fiscal space to support growth.”
He pointed out that the ongoing value-added tax reduction program was extended until June 2024 and could be extended further to the end of 2024.
A sizeable amount of public investment, equivalent to US$27.3 billion, has been programmed for disbursement this year. Together with disbursements from 2023, this additional public investment would significantly stimulate growth.
A gradual revival of export-led manufacturing would support FDI. Registered FDI increased by 13.4%, and disbursed FDI went up 7.1 per cent in the first quarter of 2024 compared with the same period last year. Accelerated public investment and improved business conditions can spur private investment in 2024.
As softened global demand caused by a slow economic recovery and delayed normalisation of interest rates in the US and other advanced economies, coupled with continued geopolitical tensions, are likely to hamper a full recovery of Việt Nam’s export-led growth, fiscal measures for supporting growth and public investment would ultimately become the key policy options to reignite growth.
To accelerate growth, stronger measures are required to address domestic structural fragilities, such as heavy reliance on FDI-led manufacturing exports, weak linkages between manufacturing export industries and the rest of the economy, incipient capital markets, an overreliance on bank credit, and complex regulatory barriers to business, he said.
Hùng pointed out that a key policy challenge is enhancing public investment effectiveness for short-term stimulus and as a foundation for longer – term development.
He said public investment remains a catalyst for Việt Nam’s economic growth, so its effective implementation is crucial.
According to the Ministry of Planning and Investment, an increase of 1 per cent in public investment disbursement corresponds to a 0.058 per cent increase in GDP growth. In addition, every 1 đồng of disbursed public investment capital stimulates 1.61 đồng of investment capital from the non-state sector.
However, the execution rate compared to planned investment has been consistently low, hovering around 80 per cent for the year. While the government has tried to address this problem, progress has been insufficient.
More systematic measures are required to improve legal and regulatory processes and so reduce constraints on efficient delivery, Hùng said. “Better readiness to expedite project implementation will help minimise cost overruns.”
The report pointed out that one major obstacle to timely and quality project preparation is the complexity of regulations, particularly land use planning, land acquisition and site clearance. Soaring prices due to shortages of materials and inputs for production, driven by regulatory constraints, lead to higher costs, forcing contract renegotiations or the need for additional funding and approvals.
As part of improving project cycle procedures, regulations should be revised to allow for principle-based flexibility and fit-for-purpose adjustments, the report wrote, adding that this will help facilitate efficient project approval and management that can be adapted to various circumstances without repeating the approval process.
By proactively addressing these obstacles in an integrated manner throughout the project cycle, Việt Nam can unlock the full potential of its public investment initiatives, driving sustainable economic growth and development, according to the report.
The Vietnamese economy contracted to 5 per cent in 2023 from 8 per cent in 2022, missing the Government’s goal of 6-5.6 per cent but still positive in the context of global slowdown.
See also
Merger of two railways to be completed by the end of this year
11:00 | 08/05/2024 Economy
Retail sales, services revenue up 8.5 per cent in four months
06:00 | 08/05/2024 Economy
60 Vietnamese solar companies investigated for anti-dumping in US
06:00 | 08/05/2024 Economy
Central beach city to lure investment from potential partners
06:00 | 07/05/2024 Economy
Banks strengthen information security systems
06:00 | 06/05/2024 Economy
Agro-forestry-aquatic product exports post trade surplus of US$4.74 billion in four months
06:00 | 05/05/2024 Economy
See more news
Difficulties faced in negotiations of power purchase agreements EVN
06:00 | 04/05/2024 Economy
DPPA boots renewable energy, competitive electricity market
15:06 | 03/05/2024 Energy
Ministry asks to increase electricity supply by 4.4 billion kWh this year
09:32 | 03/05/2024 Economy
Foreign investment disbursement hits record high in the first four months
06:00 | 03/05/2024 Economy
Việt Nam secures remarkable economic successes since national reunification
09:54 | 02/05/2024 Economy
SCG ranked among top 10 FIEs in VN
06:00 | 02/05/2024 Economy
VN needs drastic reforms to create firm ground for economic growth: experts
06:00 | 01/05/2024 Economy
Tra fish export to UAE jumps 67 per cent in Q1
06:00 | 30/04/2024 Economy
Policies needed to encourage e-commerce to embrace circular economy
07:36 | 29/04/2024 Economy
Ninh Thuận eyes power from green hydrogen
07:30 | 29/04/2024 Economy
Merger of two railways to be completed by the end of this year
11:00 | 08/05/2024 Economy
Timber and wood product exports grow
09:06 | 08/05/2024 Major exports
Vietnam, Australia eye to step up trade, investment cooperation
08:37 | 08/05/2024 Vietnam and other regions
Firms get updates on EU regulations on imported agricultural products, foods
06:10 | 08/05/2024 Foreign trade
Fansipan Rose Festival 2024 offers tourists fascinating experiences
06:00 | 08/05/2024 Tourism
Multimedia
Green transformation in tourism starts with correct understanding, awareness: expert
06:00 | 07/05/2024 Tourism
Vietnamese celebrated director to head jury at Shanghai International Film Festival
06:00 | 07/05/2024 Lifestyle
HCM City achieves $127 million in tourism revenue over five-day holiday
06:00 | 04/05/2024 Tourism
Optimising UNESCO titles for national development
06:00 | 04/05/2024 Lifestyle
7 places that are worth a visit in Điện Biên
06:00 | 05/05/2024 Tourism
Decree fosters industrial cluster development
06:00 | 07/05/2024 Policy
Decree regulates conditions for cars from abroad to Việt Nam
06:00 | 06/05/2024 Policy
Fresh policies come into effect in May 2024
06:00 | 03/05/2024 Policy
Employment Law to be revised for better assurance of employees’ interests
10:53 | 01/05/2024 Policy
IC development challenges Dong Nai Province
14:00 | 07/05/2024 Industry promotion
Textile and garment businesses face difficulties due to lack of domestic supply
05:00 | 07/05/2024 Industry
Automobile industry reported strong sales in Q1
06:00 | 05/05/2024 Industry
DPPA boots renewable energy, competitive electricity market
15:06 | 03/05/2024 Energy
Foreign, domestic investment in Ba Ria - Vung Tau rises sharply
09:22 | 07/05/2024 FDI
Foreign investors encouraged to invest in petroleum storage infrastructure
08:27 | 05/05/2024 Investment
Cambodian media values Vietnam's foreign investment attraction
09:50 | 03/05/2024 Investment
Thai Binh province rolls out red carpet for Dutch businesses
10:45 | 30/04/2024 FDI
MoF refuses to cut import tax for some materials of animal feed production
09:36 | 07/05/2024 Finance-Banking
Government proposes extending VAT cut until year end
09:10 | 05/05/2024 Finance-Banking
Stock market upgrade to help Vietnam lure another 10 bln USD in investment
09:23 | 03/05/2024 Stock Market
VND30-trillion credit package for forestry, fisheries businesses
06:00 | 30/04/2024 Finance-Banking
Is it possible to deny collection for waste unsorted at source?
06:00 | 07/05/2024 Environment
PM asks for effective preventive solutions against forest fires
06:00 | 05/05/2024 Environment
Heat records broken, more hot weather forecast for May
06:00 | 04/05/2024 Environment
Vietnam faces climate change challenges
06:00 | 02/05/2024 Environment
2024 VinFuture Prize records 1,469 nominations
06:00 | 07/05/2024 Science - Technology
HCM City: Centre for Fourth Industrial Revolution to debut in September
06:00 | 05/05/2024 Science - Technology
Vietnam’s digital products to go global
06:00 | 04/05/2024 Science - Technology
Digital transformation events for banking sector slated for May
06:00 | 03/05/2024 Science - Technology
Bình Thuận works to stop fishing vessels from infringing on foreign waters
06:00 | 08/05/2024 Province
Điện Biên Phủ Victory shows strength of intelligence, public consensus: Officer
06:00 | 07/05/2024 Society
HCM City works to put Metro Line No. 1 into operation soon
06:00 | 06/05/2024 Society
Online administrative procedures to be processed on one app only from July 1
08:49 | 04/05/2024 Society
Habeco, northern beer Industry icon, reports largest quarterly loss in four years
06:00 | 07/05/2024 Vietnamese Brands
PV Gas unions launch book donation program
14:00 | 06/05/2024 Companies
Vietnam Airlines reports profit in H1
06:00 | 05/05/2024 Vietnamese Brands
Phenikaa targets to train over 8,000 semiconductor chip design engineers by 2030
06:00 | 04/05/2024 Vietnamese Brands
“The Road to Dien Bien Phu” full of emotion
14:59 | 07/05/2024 Lifestyle
Vietnamese celebrated director to head jury at Shanghai International Film Festival
06:00 | 07/05/2024 Lifestyle
HCM City launches international photo contest
06:00 | 05/05/2024 Lifestyle
Optimising UNESCO titles for national development
06:00 | 04/05/2024 Lifestyle
Fansipan Rose Festival 2024 offers tourists fascinating experiences
06:00 | 08/05/2024 Tourism
Green transformation in tourism starts with correct understanding, awareness: expert
06:00 | 07/05/2024 Tourism
7 places that are worth a visit in Điện Biên
06:00 | 05/05/2024 Tourism
HCM City achieves $127 million in tourism revenue over five-day holiday
06:00 | 04/05/2024 Tourism