Vietnam economy forecast to recover rapidly

Prime Minister Pham Minh Chinh gives a speech at the sixth session of the 15th-tenure National Assembly - photo: National Assembly Office

Bright spots

Delivering a 2023 socioeconomic development report at the sixth session of the 15^th-tenure National Assembly, Prime Minister Pham Minh Chinh said that in the first nine months of this year, Vietnam maintained its macroeconomic stability, kept inflation under control, promoted growth, and ensured major balances. The country saw a gross domestic product (GDP) growth rate of 5.33 and 4.24 percent in the third quarter and the first nine months, respectively, and is expected to reach a GDP growth rate of more than five percent plus in 2023, the PM said.

The nine-month average consumer price index (CPI) increased by 3.16 percent. The currency and foreign exchange markets were basically stable, while interest rates have been reduced. The foreign trade value has improved monthly. Vietnam exported almost US$22 billion more than it imported in the first nine months while ensuring national energy and food security. The country’s labor market has recovered.

The service sector grew 6.3 percent over the same period last year, and industry and construction were gradually recovering.

State budget revenue had reached 75.5 percent of the 2023 target by the end of September and is expected to reach or exceed the yearly target later this year. Tax and land rent exemptions, reduction and payment extension totaled about VND75 trillion in value in the nine months.

The PM said Vietnam's national brand value reached US$431 billion, climbing up one place to the 32^nd level among the top-100 national brands in the world.

However, the PM said there are still limitations and problems that need to be solved: The economic growth remains lower than the target; the macroeconomic stability is not really solid due to a lot of external pressures; industrial production is recovering slowly; production and trading activities are still facing many difficulties; the number of dissolved and bankrupt enterprises tend to increase; domestic production remains reliant on imported materials; the domestic purchasing power decreases; exports to key markets drop; access to credit remains difficult, credit growth remains low, and bad debts tend to increase.

6-6.5 percent GDP growth target

For 2024, the government has set targets of reaching a GDP growth rate of 6-6.5 percent; a per capita GDP of US$4,700-4,730, a 24.1-24.2 percent processing and manufacturing contribution to GDP, an average CPI growth rate of 4-4.5 percent, an average labor productivity growth rate of 4.8-5.3 percent, a 69-percent rate of workers passing some kinds of training, an urban unemployment rate of less than four percent, a one-percent reduction in the rate of poor households, a five-percent growth rate in state budget revenue, and a state budget deficit rate of less than four percent of GDP.

Next year, the Government will continue operating monetary policies efficiently, consistently, properly and on a flexible basis, as well as in compliance with fiscal and other policies. It will strive to further reduce lending interest rates and prioritize the provision of credit for growth drivers (investment, consumption, and export) and priority areas.

The Government will solve existing problems, speed up public investment disbursement to ensure fulfillment of more than 95 percent of the set target, as well as socioeconomic recovery and development and national target programs, propose that the National Assembly allow further tax, fee and charge exemption and reduction, and issue appropriate, efficient policies related to the global minimum tax.

Vietnam will strongly develop its domestic market pertaining to diversifying and expanding foreign markets, improving product quality, and effectively exploiting signed free trade agreements (FTAs) while helping businesses increase capacity and join global supply chains, and strengthen smuggling and trade fraud control.

Efficiently and substantively restructuring the economy associated with growth model innovation, competitiveness improvement, rapid, sustainable development, development of digital, green and circular economy, e-commerce and newly emerging industries and fields, restoring and strongly developing industries, especially the processing, manufacturing and semiconductor chip manufacturing industries, and prioritizing the development of potential service sectors with a high added value are also something that Vietnam will do.