AsemconnectVietnam - According to the General Statistics Office (GSO), Vietnam’s gross domestic product grew about 3.72% year on year in the first half of this year.

The expansion is only higher than the 1.74% recorded in the first half of 2020.
The services sector secured the highest growth, at 6.33%, fueled by domestic consumption stimulation and tourism promotion policies. In the agro-forestry-fishery sector, agriculture saw a year-on-year increase of 3.14% in added value, forestry 3.43%, and fisheries 2.77%.
According to GSO, the growth in the first half is not high, but major economic balances are ensured, the macro-economy stable, and inflation controlled at an appropriate level.
In addition, the supply of essential goods is guaranteed, and goods procurement and domestic consumption promoted. The agriculture, forestry, and fishery sector maintained a stable growth rate, ensuring the supply of food and essential goods.
Vietnam’s economy: bright spots amid global difficulties
In the context of the global economic downturn and the lingering impact of challenges on the recovery process, many international organisations continue to highlight Vietnam’s positive economic outlook in 2023 thanks to the government's concerted efforts in boosting socio-economic recovery.
The International Monetary Fund (IMF) forecast that Vietnam's economic growth will recover in the second half of 2023, reaching about 4.7% for the whole year, thanks to the rebound of exports and easing domestic policies. Inflation is expected to be controlled below the State Bank of Vietnam's 4.5% target.
According to Paulo Medas, head of the IMF's Article IV Mission, in the medium term, Vietnam can potentially regain high growth when structural reforms are effectively implemented.
The projected growth may be lower than that of 2022, but Vietnam's economy still performs well, he said.
Experts of the mission have highly valued the resilience of Vietnam's economy and called for better policy coordination to stabilise the macroeconomic situation in the current context.
Regarding Vietnam’s economic outlook, Singapore-based Maybank Research Pte Ltd said in a recent report that Vietnam’s GDP growth is likely to expand by 5% in the second quarter, and 4% in 2023 before reaching 6% in 2024.
Experts from Maybank predicted that the drop in exports will continue in the second half of 2023 due to slowing global growth, while domestic consumption is likely to decline in the next months amid a weak labour market.
Addressing the Ministerial Council Meeting (MCM) of the Organisation for Economic Co-operation and Development (OECD) in Paris in June, Secretary-General of OECD Mathias Cormann expressed his impression of Vietnam’s socio-economic development achievements in recent times.
He affirmed that the OECD will continue to accompany Vietnam on its path towards green and sustainable economic development.
In a dialogue among member nations of the United Nations in New York last month, representatives of the UN Development Program (UNDP) and countries highly valued Vietnam’s post-pandemic economic recovery and its efforts to ensure social security and responding to climate change through appropriate and timely policies.
Meanwhile, participants at the 14th Annual Meeting of the New Champions of the World Economic Forum (WEF) in Tianjin, China, acknowledged Vietnam as one of the bright spots in the region’s economic recovery, a successful model in pandemic fight, and a pioneer in growth model transformation and energy transition.
Representatives from many enterprises, impressed by the Vietnamese Government’s strong commitment and support for the business community, said Vietnam is among the most suitable choices for long-term investment and cooperation.
They spoke highly of the country’s participation in the meeting, affirming that they will come to Vietnam to continue discussions with its ministries, sectors and localities on how to realise cooperation plans.
According to the portfolio-adviser.com of the UK, Vietnam is one of the fastest growing economies in Asia.
In its article, the site said many years of consistently high GDP growth have been thanks to a highly attractive combination of political stability with sound pro-market execution from the Vietnamese Government, which has managed to slash poverty from 17% to less than 5% in the last decade.
The best-known growth driver for Vietnam is its step-change in foreign direct investment (FDI), benefiting from an increase in exports, it said, adding that Vietnam is now moving more towards manufacturing higher value products, more in electronics rather than textiles.
One of Vietnam’s most critical FDI sources is technology giant Samsung Electronics of the Republic of Korea, which employs tens of thousands of Vietnamese workers. The firm is the largest investor in the country with 50% of its handsets being produced there.
The Vietnam stock market overall now meets the size and liquidity requirements to be included, with a four-fold surge in retail participation during the past 2-3 years, driven by digital account technology, it noted.
According to the Business Times of Singapore, for decades, Vietnam has been the home of low-cost manufacturing facilities and cheap labour. However, in recent years, the government and the private sector have made a big push to bring in the best talent in an ongoing effort to become a regional technology manufacturing hub.
This has attracted the attention of numerous global tech giants, many of whom have beefed up their investments in Vietnam’s high-tech sectors.
In the first half of 2023, some big names announced plans to increase their presence in Vietnam. Chinese display manufacturer BOE Technology Group Co., Ltd. – a supplier for both Apple and Samsung – has plans to build two factories with a total investment capital of 400 million USD in Vietnam. Meanwhile,
US semiconductor producer Marvell Technology will establish a world-class design centre in Ho Chi Minh City.
Meanwhile, The Nation newspaper of Thailand quoted Phusit Ratanakul Sereroengrit, General Director of the Department of International Trade Promotion (DITP) under the Thai Ministry of Commerce, as saying that Thai businessmen should study the possibility of exploiting Vietnam's steadily growing retail market, which is likely to reach 350 billion USD by 2025.
Vietnam’s economic growth to recover in the second half of 2023
Vietnam can return to high growth rates over the medium term, as structural reforms are implemented, Division Chief of the International Monetary Fund (IMF)’s Fiscal Affairs Department Paulo Medas has said.
Medas led an IMF team to Vietnam from June 14-29 to hold discussions for the 2023 Article IV consultation with the country.
In an interview granted to the VietnamPlus e-newspaper under the Vietnam News Agency (VNA), he said that Vietnam’s economic growth is projected to recover in the second half of 2023, reaching around 4.7% for the year, supported by a rebound in exports and expansionary domestic policies. Inflation is expected to remain contained below the State Bank of Vietnam’s 4.5% ceiling.
The IMF predicts the world economy will continue facing difficulties in 2024 and can only recover in 2025, he said.
According to him, the measures taken by the central bank and the government such as interest rate cuts, tax reduction, and public investment and spending expansion have helped soften the impact of external and domestic headwinds.
The expert stated that the SBV was able to both contain price and liquidity pressures in a very challenging environment. Greater exchange rate flexibility and continued efforts to modernise the monetary policy framework will provide significant dividends. Further monetary policy easing, and measures to boost credit growth, at this stage will likely be less effective and more risky, given global rates are likely to stay high for long, and banks in Vietnam are already facing rising non-performing loans and high loan-to-deposit ratios, he noted.
In this context, fiscal policy should take the lead in providing support to the economy and the poorest and most vulnerable groups, especially as the government has fiscal space. The planned increase in spending (wages and public investment) and cut in taxes will help boost domestic demand.
“The current challenging economic environment and rising non-performing loans require the swift development of an action plan to protect financial stability and accelerating needed reforms. This would include strengthening the bank crisis management framework and improving bank regulation and supervision. The authorities should take advantage of the ongoing revision of the Law on Credit Institutions to develop more effective bank resolution and emergency liquidity frameworks,” Medas said.
To help Vietnam achieve its future macro-economic management goals, the IMF expert stressed that the government needs to maintain its reform efforts in the medium term to achieve the set medium and long term goals and become a developed economy by 2045 and to ensure total greenhouse gas emissions will be reduced to zero by 2025.
It is also necessary to reform the business environment by reforming administrative procedures, creating favourable conditions for the development of enterprises, invest in infrastructure, ensure renewable energy in the next 5-10 years, and pour capital into technology in education and training, he added.
Vietnam likely to keep inflation below 4.5% in 2023
The goal of keeping inflation under 4.5% this year will be totally feasible, as the rate may range between 2.5-3.5%, experts said at a seminar held in Hanoi on July 4.
Vice Director of the Institute of Economics – Finance under the Academy of Finance Nguyen Duc Do analysed that factors like money supply, interest rates and aggregate demand did not only cause inflation to drop sharply in the first six months of 2023, but also restrained the CPI rise in the last six months. Over the past one year, the CPI has only increased 0.17% per month on average, he noted.
Do predicted that if the rate continues to be maintained in the rest of the year, the inflation rate in 2023 will be at 2.5%, which means the target of 4.5% for this year will be surely reached.
Economist Vu Vinh Phu said that the CPI of this year will not exceed 3.8-4%, helping the country to stabilise the macro-economy and rein in the inflation.
According to the Price Management Department under the Ministry of Finance, the world's economic situation in the rest of the year has yet to show positive signals due to the escalating Russia-Ukraine conflict. Vietnam is also experiencing slow economic growth and decline in exports due to falling demands of importers.
In the domestic market, the department highlighted a number of factors posing pressures on prices such as a 20% rise in basic salary from July 1, and an increase in commodity prices.
However, it pointed out that petrol prices are forecast to continue to fall or remain stable, while the supply of food and goods in the market has been abundant, and the global inflation may drop, helping ease the pressure on Vietnam.
Vice Director of the Price Management Department Pham Van Binh held that with the CPI growth rate as recorded in the first six months of 2023, there is a high hope to control inflation this year, enabling the flexible adjustments of the prices of some state-managed goods.
But the impact of the price adjustment of state-managed goods on the CPI in 2023 depends on the time of promulgation of legal documents on price adjustment of commodities by ministries and sectors. In addition, the fact that the core inflation is at a much higher level than general inflation indicates long-term high inflation risks, he said.
In the last months of the year, the department will continue to coordinate with ministries and local authorities to implement drastic measures on price management in a cautious and flexible manner, while giving advice to the Prime Minister and the Steering Committee for Price Management.
The department said that the CPI in the first half of this year rose 3.29% over the same period last year, which was lower than that in the same time of 2014, 2017 and 2020, but higher than the remaining years in the 2014-2023 period. Meanwhile, the core inflation rose 4.74%, the highest level in the first half of a year in the 2014-2023 period.
CK
Source: VITIC/Vietnamplus.vn