Leverage recovery time to accelerate growth

	Vietnamese firms urged to strengthen green growth strategy
	Enterprises think about the future
	Interest rate cut contributes to supporting economic growth: economists

Vietnam has not shown any sign of "bottoming out" to bounce back in the context of increasing difficulties hindering growth. Source: Internet.

Six points of light

According to the report "Vietnam's macroeconomics in May 2023", recently published by Dr. Can Van Luc, Chief Economist of BIDV and the authors of the BIDV Research and Training Institute announced that the world economy in the first five months of 2023 continued to face difficulties, the recovery signals were weaker than in the four months at the beginning of the year, in which the economic "leaders" faced many difficulties.

Domestically, Vietnam's economy continues to record some positive results:

Dr. Can Van Luc and his team have pointed out six important bright spots of Vietnam's economy in the first five months of 2023.

First, the pandemic is under control.

Secondly, the Government continues to promulgate many policies and solutions to remove difficulties and obstacles, prioritizing economic growth.

Third, retail activity grew well, which is an important driver for economic growth. Since important growth drivers such as the manufacturing and export sectors are declining, the consumption sector is an important platform to support economic growth. However, it should also be noted that the growth momentum of the retail and consumer sectors is showing signs of slowing down (in the first three months of the year increased by 13.9%, accumulated in 4 months increased by 12.77% and in 5 months, increased by 12.55% over the same period last year).

Fourth, inflation was stable although many state-managed goods increased in price. The cooling trend of inflation is quite clear when the CPI decreases for three consecutive months. However, inflation pressure remains (although under control). With the dominant supporting factors (tuition support policy; the prices of goods managed by the state are reasonably regulated, the supply of essential goods is guaranteed, interest rates are reduced, and the exchange rate is stable). However, the money supply cannot increase rapidly), the average CPI for the whole year is likely to be lower than the target (at 3.8-4.2%).

Fifth, the disbursement of public investment continues to be promoted, which is an important driving force for economic growth. With the drastic direction of the Prime Minister and the efforts of the ministries, branches and localities, accumulated in the first five months of the year, implemented capital reached VND 177,000 billion, equaling 25.5% of the year plan and increasing by 18.4% over the same period last year (the same period in 2022 equals 24.9% and increases by 10.8%). The positive maintenance of public investment results is thanks to the fact that ministries, branches and localities have focused on promoting the implementation of projects with the goal of creating a driving force for economic growth in accordance with the guiding spirit of the Prime Minister. However, with the high goal assigned by the Prime Minister (about 700,000 billion VND, an increase of about 25% compared to the plan in 2022), ministries, branches and localities still need to continue to focus and make more efforts, especially in the process of preparing and implementing key projects in the remaining months of this year. Sixth, the interest rate level continued to decrease, and the basic exchange rate was stable.

Difficulties are still waiting

Also with the same assessment of Vietnam's economic situation in the past five months, in a new report released on Vietnam's economic situation in May and the upcoming outlook, HSBC assessed that Vietnam has not yet overcome the current difficult situation and has a long way to go before seeing a significant recovery in the trade cycle. Although economic activity data in May did not deteriorate, Vietnam has not shown any signs of "bottoming out" to bounce back amid increasing difficulties hindering growth. In which, the biggest risk to growth is that the external market is still slow.

The World Bank (WB), in its macroeconomic update report in May 2023, also said that although industrial production has improved slightly, it is still weak. The economy is facing "headwinds" from the outside as weak external demand continues to put downward pressure on exports, weakening industrial production. Although domestic consumption remained strong, credit growth slowed, reflecting weak credit demand.

Notably, one of the main growth drivers of Vietnam is that import and export activities have not really recovered, the decline came from the fact that businesses actively reduced imports of production materials in the context of difficult export prospects and high inventories of raw materials (inventories of the manufacturing industry in the first quarter of 2023 increased by 19.8%); prices of imported goods fell more sharply than exports; logistics costs are still high, making some export products (agricultural products, food) of Vietnam less competitive than other countries. Besides, the import decreased more than the export, causing the trade surplus to continue to increase, reaching 9.8 billion USD (compared to +7.6 billion USD in 4 months - according to the General Department of Customs), contributing to exchange rate stability, an increase foreign exchange reserves, but on the other hand, it also shows that production demand is still weak in the context that export orders have not recovered.

Recognizing the difficulties and difficulties of the economy, the Government, when reporting to the National Assembly recently, also emphasized the risks and challenges of the economy in the current context. "The existence and intrinsic weakness of the economy that has lasted for a long time has gradually revealed itself in difficult conditions, especially in the weak real estate market, corporate bonds, and weak banks," the report said.

At the discussion in the hall on the additional assessment of the results of the implementation of the Socio-Economic Development Plan and the state budget in 2022; On the implementation of the socio-economic development plan and the state budget in the first months of 2023, the National Assembly deputies also emphasized the difficulties of the economy and proposed that the National Assembly and the Government should soon have overall solutions to revive the economy, take advantage of the recovery time to accelerate growth.

Delegate Le Thanh Van (Doan Ca Mau) said that the socio-economic situation in the first five months of the year had mixed expressions of both positive and negative. Therefore, the National Assembly and the Government must view the economic picture objectively and calmly to control the situation and catch the disease with the right cause. At that time, there is a cure for the economy's health to recover quickly and possibly break through the next quarters of this year.