Government targets 7% growth

Government targets 7% growth

>> GDP growth forecasts revised upwards
>>GDP growth: Vietnam at 2e rank in Southeast Asia and 9e in the world

The ambitious target of 7% growth which exceeds the target proposed by the National Assembly by about 0.5 points is expected to give new impetus to the country’s economic growth in 2023. significant socio-economic advances in the first half of the year despite global uncertainties and domestic difficulties, Prime Minister Pham Minh Chinh said. He referred to a context of galloping inflation in the world which threatens the recovery.

Vietnam’s economic activities have resumed at a rapid pace in the post-pandemic period. Photo: VNA/CVN

The country posted growth of 6.42% in the first six months of 2022, equivalent to its pre-epidemic average level. Macroeconomic balances were kept stable, inflation was brought under control, and the consumer price index only increased by 2.44%, a relatively low level. Foreign trade jumped 16.4% year on year, exports increased by 17.3% and imports by 15.5%. Foreign direct investment grew by 8.9%, which shows that investors remain confident in the prospects for revival and development of the Vietnamese economy.

In order to support recovery and sustainable development, the government stresses the need to continue to control COVID-19 well, to adopt a prudent monetary policy, to proactively adapt to inflation risks, to administer the credit to meet the needs of production and trade and to ensure energy and food security.
In this sense, Prime Minister Pham Minh Chinh approved the creation of the Steering Committee of the socio-economic recovery plan, with the watchword of ensuring rapid and effective implementation of Government Resolution No. 11 and other resolutions aimed at boosting economic activities.

Advice from Vietnamese and foreign experts

Following the control of COVID-19, a strong recovery was recorded in a number of sectors such as retail, pharmaceuticals, logistics and arboriculture.

In his report “Vietnam at a glance” (Vietnam in a nutshell) recently released, HSBC bank raised its annual growth forecast to 6.9%, from 6.6% in April. At the same time, it lowered its growth forecast for 2023, from 6.7% to 6.3%. HSBC predicts that the country could face an average inflation of 3.5% in 2022, but the inflation rate could exceed the 4% cap at times.

Singapore-based United Overseas Bank (UOB) on June 30 raised its growth forecast for Vietnam for this year to 7% from 6.5% last June, subject to no further disruptions due to COVID- 19 takes place and the economy grows by about 7.6-7.8% in the second half. This rebound is the consequence of the acceleration of production for the 4e consecutive quarter and the robust recovery in services, the bank said, noting that business has returned to normal as COVID-19 restrictions eased and borders reopened.

The International Monetary Fund (IMF) lowered its growth forecast for the global economy this year, but said Vietnam’s recovery would be boosted by the implementation of its socio-economic development and recovery program. François Painchaud, IMF representative in Vietnam, forecast growth of 6% in 2022 and 7.2% in 2023. The country has managed to maintain its fiscal stability, external balance and financial stability thanks to macroeconomic measures that helped reduce the impact of the epidemic, he added.

Deputy Minister of Planning and Investment Trân Quoc Phuong explained why Vietnam posted robust growth in the first half. “The reasons are many: the rapid reaction of the government which moved from the +zero COVID+ policy to a safe adaptation to the epidemic, but also the efforts made by public authorities, businesses and the population. From the beginning of the year, we prepared for a rapid and lasting recovery. Today, all sectors have resumed the direction of travel”he remarked.

Phuong, however, said Vietnam’s economy faces new and unpredictable challenges. Inflation is one of the biggest risks for this year. National and international organizations, as well as economists predict that this year inflation will approach the 4% threshold set by the government. While growth in some of the world’s major economies remains sluggish, Vietnam’s second-quarter results bolstered the confidence of international organizations in their growth forecasts. The growth of the country’s economy will be among the highest in Southeast Asia.

Vietnamese companies must demonstrate flexibility, adaptability and innovation to recover sustainably. Photo: VNA/CVN

A strong economic rebound

The international press has published numerous articles praising Vietnam’s strong economic rebound in the first six months of the year. The newspaper Nikkei Asia insisted on the prosperity of national exports, particularly in the textile-clothing sector. His article said Vietnam’s textile exports are expected to hit a record high of 22 billion USD in the first half of the year, up 23 percent year on year.

“Vietnam’s economy in the second quarter saw its strongest growth in 11 years”, is the title of an article in Channel News Asia. He quotes the World Bank for which the Vietnamese economy has recovered strongly despite the uncertainties caused by the conflict in Ukraine, the confinement in China as well as inflation.

Dorsa Ti Madani, the World Bank’s chief economist in Vietnam, remarked: “The growth of the country is very impressive. It is the consequence of two main factors, namely exports and a strong recovery in domestic consumption after the complete lifting of anti-COVID-19 restrictions”.

“Vietnam’s performance so far is much better than other countries in the region. The domestic manufacturing sector is relatively stable. The government has adopted a good policy by reducing certain taxes, in particular the environmental tax on fuel to control inflation”, analyzed Alain Cany, president of the European Chamber of Commerce in Vietnam (EuroCham). The results obtained will lay a solid foundation for the national economy to continue to grow in the 2e semester and next year.

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