Maintaining recovery momentum amid uncertainties

Besides unfavorable factors, Vietnam's economy is exposed to many fundamental innovations for development prospects in 2024. Photo: Duc. Ảnh: Đức Duy/Vietnam+

At the same time, it is necessary to continue institutional reform for sustainable development and to lay the foundation for new fields such as digital economy and green economy. These solutions will play an important role in shaping the development direction of Vietnam's economy in 2024.

Growth is associated with macroeconomic stability

Assessing the current difficulties of Vietnam's economy, Dr. Pham Anh Tuan, Executive Deputy Director of the Vietnam Institute of Economics, said that in the period 2023-2024, the world economic situation is suffering from rapid, complex and unpredictably fluctuation, affecting most of the countries and regions on a global scale.

Uncertain factors for Vietnam's economy include negative impacts from three external "headwinds". In particular, many major economic partners of Vietnam reveal growth decline, especially China, along with economic recessions in others such as Germany and some EU countries, and the decline in disposable income in developed countries have negative impacts on Vietnam's exports. Tight monetary policy affects exchange rates, thereby affecting domestic trade and investment. Accordingly, international prices, especially oil prices and related products, are still uncertain although there are positive signals in input prices. In addition, difficulties also come from uncertainty about the implementation of domestic policies and fluctuations in the real estate market in recent times.

However, according to the Executive Deputy Director of the Vietnam Institute of Economics, besides unfavorable factors, Vietnam's economy still has many creative points that are fundamental to the development prospects of 2024 such as: stable macroeconomic foundation, low inflation, minor exchange rate fluctuations, stable budget revenues and expenditures, foreign investment increased sharply... In fact, Vietnam's economy in the first quarter had recovery indicators. recovered and developed quite well, gross domestic product (GDP) in the first quarter was estimated to increase by 5.66% over the same period last year, higher than the growth rate of the first quarter of the years 2020-2023.

According to Dr. Vo Tri Thanh, many managing macroeconomic policies have been implementing in recent times to stabilize the macro economy, stimulate consumption, tourism and supporting workers, continue to improve the legal framework with many "old" laws being improved and "new" construction, to meet the needs of the digital economy, green trends, supply chain shifts, and many other effective policies.

Three groups of solutions shape the direction of development

The Asian Development Bank (ADB) in its April 2024 Asian Development Outlook (ADO) Report stated that Vietnam's economy is expected to grow by 6% in 2024 and 6.2% in 2025. To promote growth, ADB believes that stronger measures are needed to address structural weaknesses of the domestic economy such as: heavy dependence on the export processing industry of FDI enterprises; loose linkages between export processing industries and the rest of the economy; young capital market; excessive dependence on bank credit as well as complex legal barriers for businesses. Besides, ADB believes that public investment is still a driving force for Vietnam's economic growth, and the effective implementation of public investment is important to promote growth.

Also according to Dr. Vo Tri Thanh, the Vietnamese Government needs to maintain macroeconomic stability, stimulate consumption, invest in infrastructure development, attract quality FDI by taking advantage of upgrading partnerships with the United States and Japan and implement supporting measures. At the same time, it is necessary to continue institutional reform for sustainable development and to lay the foundation for new fields such as digital economy and green economy. These three groups of solutions will play an important role in shaping the development direction of Vietnam's economy in 2024.

“Despite many difficulties ahead, we still have reason to believe in a more positive outcome in economic development in 2024. More importantly, we hope that Vietnam can build better fundamentals quality, both in terms of institutions, infrastructure and human resources, to make a breakthrough in development in the coming period", Dr. Vo Tri Thanh affirmed.

Agreeing with the above viewpoint, according to Dr. Tran Dinh Thien, member of the National Financial and Monetary Policy Advisory Council, needs to look straight at the essence of Vietnam's economy in terms of the real estate market and the overall structure of the financial market. In terms of economic growth, Vietnam is having a successful paradox with high GDP growth but low inflation, stable macroeconomics but risky market, businesses, and banks. The special point here is the phenomenon that money cannot be converted into available capital to contribute to growth. “The economy is open but foreign direct investment (FDI) accounts for 2/3 of import-export turnover. The economy is abundant with money but businesses are 'thirsty' for capital. The scale of newly established businesses is getting smaller and smaller, although the number of businesses has increased, the actual lifespan of the business is short," Dr. Tran Dinh Thien analyzed.

Also according to Dr. Tran Dinh Thien, our country is gradually stabilizing the macro economy, deposit and lending interest rates maintain a downward trend. Therefore, to turn challenges into opportunities, it is necessary to effectively exploit the momentum from the National Plan, new laws such as the Land Law and empower localities to attract investment; Implement new approaches in developing financial and monetary markets; Research and build models of new-generation industrial eco-zones and free trade zones... Besides, efforts are needed to open capital channels, mechanisms and procedures.