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| Nguyễn Thị Hương, general director of the General Statistics Office. — VNA/VNS Photo Danh Lam |
Many experts have predicted Việt Nam’s economy will slowly recover in the final months of 2023. Nguyễn Thị Hương, general director of the General Statistics Office (GSO), speaks to the Vietnam News Agency on this issue.
As both the forces of supply and demand are positively recovering, is Việt Nam’s economy on a better path in the final months of the year?
Looking at the overall picture, all three elements – consumption, investment, and trade balance – are showing signs of recovery. Consumer demand has seen strong growth in July and August this year, with total retail sales of goods and consumer services continuing to rise significantly compared to the same period last year. In the first eight months of 2023, the total retail sales of goods and consumer services at current prices reached VNĐ4 quadrillion (US$177.8 billion), up 10 per cent compared to the same period last year, excluding the factor of a 7.7 per cent price increase.
Public investment and foreign direct investment continue to show positive trends. Despite the challenges in the global and regional economy, the total foreign direct investment in Việt Nam in the first eight months of this year reached $18.15 billion, an increase of 8.2 per cent compared to the same period last year. This indicates that foreign investors continue to show interest, trust, and expectations in the country’s economic development.
From the supply side, production activities are maintaining growth in all three sectors. In particular, the agriculture, forestry, and fisheries sector continues to play a supporting role in the economy. Industrial production has shown positive trends since May 2023.
Despite the remaining challenges, the number of newly established businesses in the first eight months of 2023 stands at 103,658, the highest level for this period, compared to previous years. This represents a 2.3 per cent increase compared to the same period in 2022 and is 1.2 times higher than the average for the 2018-22 period.
However, despite many measures implemented by the National Assembly and the Government to revive the business sector after several years of COVID-19 and global economic downturn, the “health” of businesses has declined. Therefore, there are still many challenges facing the economy in the near future.
Some limitations in the business environment have not been addressed and continue to hinder business operations. Issues related to access to loans and the ability to absorb capital are not handled. Input production costs are still high while the output market is difficult, and export orders have decreased. The labour market is facing difficulties as businesses have to reduce working hours, cut wages, and lay off workers due to a lack of domestic and export production orders.
Recent economic growth outlook reports released by international organisations show uncertainties in the global situation in the coming months. The driving forces for global economic recovery are not yet clear. Moreover, the constraints from tighter monetary policies are becoming increasingly evident.
The recent economic growth prospects report released by the World Bank indicates that global economic growth in 2023 is projected to reach 2.1 per cent, the slowest rate since the global financial crisis in 2008. With many countries raising interest rates and implementing measures to control inflation, economic recovery and development are slowing down. Global economic demand is declining, including non-essential consumer goods.
Therefore, international trade activities are still on the decline, even though the situation is more optimistic than in the first half of 2023. This means that Việt Nam still needs to be cautious about potential challenges from the global economy.
What is your prediction on Việt Nam’s economic development in the final months of 2023?
Some factors contributing to the late-year growth include the increase in basic salaries for civil servants, officials and workers implemented from July 1; and policies such as tax reduction, fee reduction, and lower interest rates for loans. The tourism sector will be one of the significant drivers of economic growth in the late months. Public investment is being pushed strongly, creating ripple effects in other economic sectors. Export opportunities for rice to potential markets, and particularly, business confidence for the coming quarters is better than the previous quarter.
However, this doesn’t mean that the domestic situation is entirely rosy. The domestic business sector is still facing numerous challenges and difficulties, such as rising input production costs while the labour market is struggling.
To maintain the achieved results in various sectors as in the recent past, Việt Nam’s economy needs to ensure the supply source from production and focus on measures to boost the “three-horse carriage” which are: consumption, investment and export, to achieve the highest economic growth results in the later months of the year.
To stimulate consumer demand, implementing policies such as reducing value-added tax (VAT), lowering prices of goods, adjusting salary increases, reducing personal income tax, etc., is crucial to strengthen domestic purchasing power.
The driving forces for late-year growth include the vigorous promotion of public investment to release resources and create opportunities for stimulating production and business activities. Many projects in the Socio-economic Recovery and Development Programme, as well as in the mid-term public investment plan, have essentially completed procedures and need to be drastically implemented. This will directly benefit several sectors such as construction, transportation and the production of construction materials.
To boost exports and maintain a sustainable trade surplus, experts predict that export activities will recover better in the late months due to a significant reduction in inventory levels in major markets, especially the United States. Therefore, businesses should seize this opportunity to boost exports.
On the government’s side, it is necessary to reduce various fees and support businesses in seeking new markets, effectively utilising signed free trade agreements and promoting trade efficiently. The Government agencies should focus on developing the domestic market effectively, conducting market research, and providing information and guidance to help businesses exploit the domestic market efficiently.
The growth in tourism activities will create opportunities for the development of various service sectors, boost domestic consumption and on-the-spot exports.
I believe that with the close direction and management of the Government, the Prime Minister, and the determination of ministries, sectors, and localities, the economy can still achieve the highest possible growth rate in the context of global economic difficulties. — VNS
This article was first posted on Vietnam News