Expert: Vietnamese economy to continue growth track

Seven-month growth is mainly driven by the retail of goods and services (Photo: thanhnien.vn)

Country Director of the Friedrich Naumann Foundation for Freedom (FNF) in Vietnam Andreas Stoffers has anticipated that the Vietnamese economy will continue its growth track.

During an interview recently granted to Lao Dong (Labour) newspaper, Stoffers said the Vietnamese economy grew by 3.72% in the first half. Though lower than last year, it still stood as a positive figure amid the global economic downturn.

The average consumer price index (CPI) increased moderately by 3.12% year-on-year in January-July. The declining trend in the average CPI growth over the months is a positive sign indicating that Vietnam is on track to achieve the inflation control target of below 4.5% set for 2023.

During the first seven months of this year, the growth was mainly driven by the retail of goods and services, which rose by 10.4% annually. The industrial production index in July also saw an increase from earlier this year.

Attributing these positive outcomes to the fiscal and monetary policies of the State Bank of Vietnam (SBV), he said the reduction in interest rates is stimulating credit demand and enhancing liquidity within the banking system and the economy, particularly in the credit sector. Alongside setting credit growth cap at 14% for this year, the SBV will issue necessary warnings.

Country Director of the Friedrich Naumann Foundation for Freedom in Vietnam Andreas Stoffers (Photo: laodong.vn)

In his view, Vietnam’s GDP growth will exceed 5% this year. Apart from the contribution of FDI, additional momentum will be needed from increased public investment and personal consumption.

In face of headwinds such as the Russia-Ukraine conflict; difficulties in Vietnam’s partner countries, especially the European Union; slow recovery in various markets and the global inflation specter, he said a comprehensive set of solutions is required to both foster development and manage risks effectively.

There should be an improvement in the entire financial sector, such as the establishment of a financial centre in Ho Chi Minh City in the medium term. the equally important is to promote cooperation between the public and the private sector to generate a collective strength, thus creating the opportunity to access various financial products and international markets, enabling the public to invest in perse asset types, he said.

He also suggested a push for financial education to help people understand financial products and make careful investment decisions as well as institutional improvement, particularly in finance.

To achieve set targets, he said it could be facilitated by the Government support through expediting institutional reform, modernising legal frameworks and coordinating policies. The most crucial aspect is addressing the weakness in decision-making process that currently exists in certain administrative sectors.

At the same time, there is a need to increase sustainability, step up circular economy and strongly digitise administrative processes, and improve environment protection. Boosting public investment while reducing inefficient structures, especially at State-owned enterprises, is also essential.

To stimulate investment and create liquidity, interest rates could be cautiously lowered further, with subsequent adjustments as the economy experiences significant recovery. Lastly, domestic consumption demand should also be further bolstered, he added./.