Ministry Predicts Maximum 6% GDP Growth for This Year
According to the Ministry of Planning and Investment, Vietnam’s GDP growth is expected to reach a maximum of 6% this year, despite efforts to address business and production difficulties. During a government meeting on Saturday, the ministry discussed three potential GDP outcomes for 2023. The lowest scenario projected a 5% growth rate for the entire year, with a required 7% growth rate in the last quarter, as analyzed by the ministry. The middle scenario anticipated a 5.5% growth rate for the year, with a required 8.8% growth rate in the final quarter. The most optimistic scenario predicted a 6% growth rate for the year, contingent on a 10.6% growth rate in the fourth quarter. The ministry acknowledged the challenges, particularly as third-quarter GDP growth stood at only 5.33%.
Ministry analysts emphasized that the pace of industrial production recovery, especially in manufacturing and processing, would significantly impact economic growth in the final quarter. Additionally, demand from major export markets, domestic tourism, and year-end spending, including the Lunar New Year holiday, will play a crucial role. A ministry spokesperson stated that all scenarios present challenges and require units and localities to leverage their resources and external opportunities to achieve the highest degree of growth in the fourth quarter, thereby generating momentum for 2024.
All the GDP growth scenarios outlined by the ministry fell below the intended target of 6.5% set by the government and the National Assembly. Experts at the Vietnam Economic Forum, held earlier this month, also expressed the view that Vietnam’s GDP growth this year is unlikely to exceed 6%, given the slowdown in the main drivers of economic growth during the first eight months.
The ministry also reported challenges faced by production and businesses concerning markets, financial flows, and administrative procedures. While these issues are being addressed, the ministry noted that changes are unlikely to occur in the short term. Exports in the first nine months declined by 8.2%, while imports dropped by approximately 14%. Major export goods, such as phones, components, textiles, and shoes, experienced decreases. Although demand from key markets like China, Japan, the U.S., and the EU has improved, the situation is still not ideal. Domestically, the market is recovering slowly, with a surplus of products in the manufacturing and processing sectors. Access to credit remains challenging for businesses and individuals, with business bond issuance decreasing by over 60% compared to the same period last year.
The ministry spokesperson highlighted that the challenges faced by businesses and the economy have directly impacted and increased burdens on the macro-economy’s operation. Non-state sector investments in the third quarter increased by 2.5% compared to the same period last year and showed a general 9% increase in the first nine months of this year. However, registered capital for newly created businesses declined, reflecting challenging short-term economic prospects. The real estate and business bond markets continue to carry risks and challenges that require close monitoring, particularly following the bankruptcy cases of certain Chinese real estate companies.
To bolster growth, the ministry outlined various solutions, including tax and cost reductions in 2024. They also proposed mobilizing resources, both domestically and internationally, for investment and development. The ministry suggested taking advantage of the newly established comprehensive strategic partnership with the U.S. to attract investment from multinational corporations and create ecosystems for chip and semiconductor manufacturing. This would involve constructing centers for maintaining aviation equipment and manufacturing chips and semiconductors in Vietnam. Prime Minister Pham Minh Chinh also emphasized the need for policies to respond to challenges and boost drivers of growth during the meeting.