Vietnam has the potential to achieve economic growth goals in 2024

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Prof. Dr. Hoang Van Cuong, National Assembly Deputy, Vice Rector of the National Economics University, and Member of the Budget and Finance Committee of the National Assembly

Recently, at the 6th session of the 15th National Assembly, economic and social targets for 2024 were approved, and it was agreed to set a target for the growth of the gross domestic product (GDP) to reach 6%-6.5%. What is your opinion about this target?

If compared to the set target for the entire term, this is not a high figure because the average growth target for the 2021-2025 period is around 6.5-7%. While the growth rate in the early years of this term did not achieve that figure, the task set for the later years of the term is very high and challenging. Therefore, 2024 is a year where we need to make every effort to approach the growth rate close to the "target." That's why we need to raise our determination and set a target of 6-6.5% to strive to achieve.

However, compared to the actual situation this year, this will indeed be a high figure because the forecasted growth rate for the entire year 2023 is only about 5%. In the general trend of the world, although our 5% is not as expected, it must be affirmed that this is still a relatively high level compared to the world and the region. Moving into 2024, many forecasts indicated that the economic growth rate would be lower than in 2023 in most countries, including Europe and the US.

The forecast of a lower growth rate next year compared to this year stems from many reasons, especially when the underlying causes of the economic stagnation in 2023 that did not achieve the set target are continuing into 2024.

Firstly, the political crisis is at risk of not decreasing, and even unfolding abnormally, increasing like the recent political and security situation in the Gaza Strip.

Secondly, the global debt waves after the Covid-19 pandemic are strongly affecting economic potential. In major economic regions of the world, high interest rates and inflation remain factors that cannot stimulate growth recovery.

In my opinion, these are the factors that make the forecast for the global economic situation in 2024 not very optimistic.

For Vietnam, with an economy highly dependent on the world market, as exemplified in 2023, internal resources have been carefully prepared, bank capital is available, and businesses are always ready to produce and do business, but the market does not exist, so production capacity has to stop, and workers have to take time off.

Clearly, our country depends on the foreign market, relies heavily on the recovery of the world economy, and if the world economy does not recover, it will certainly be difficult.

So, in your opinion, can we achieve this goal in 2024?

According to me, the potential for Vietnam to achieve this goal exists. Amid global economic difficulties, Vietnam's economy is relatively stable. Vietnam's growth rate in the past three quarters has been quite stable: 3.32% in the first quarter of 2023, 4.14% in the second quarter, and 5.33% in the third quarter. Therefore, in a challenging global environment, as Vietnam's economy is on the rise, these results bring expectations that the growth momentum will continue into 2024. In 2023, nearing 5%, it is conceivable that in 2024, it could approach 6% to 6.5%.

Furthermore, macroeconomic foundations for stabilizing the economy are in place. Firstly, regarding inflation, world inflation is a "headwind," while in Vietnam, inflation is relatively well-controlled. In 2023, we set a target to control inflation below 4.5%, and all forecasts indicate that for the whole year, it is likely to be around 4%. This means that inflation is being controlled below the set level.

Regarding interest rates, while other countries are trending upward, Vietnam continues to decrease. After four consecutive interest rate cuts, recently, the State Bank of Vietnam issued an instruction to continue the reduction. This factor shows that controlling the monetary market is quite good, and the exchange rate is stable. Stability in the financial market will prevent investment sources from being risky, thereby encouraging investors to "open their wallets" for investment.

In addition to inflation and interest rates, we cannot overlook the debt factor. Vietnam handles this factor very well. In the world, there are cases of corporations facing bankruptcy, but in Vietnam, despite warnings related to the maturity and repayment of corporate bonds in the early months of 2023, the government's solution in controlling corporate bond debt has stabilized the market. Until now, there is almost no threat of corporate bond debt, and even the corporate bond market is beginning to develop again; corporate debt is being resolved. Regarding public debt, in 2023, it is forecasted to be below 40% of GDP, meaning a significant reduction compared to the permitted public debt ceiling. I believed that our internal factors were quite robust for driving development.

Moreover, in 2024, there will be positive changes in the market compared to 2023. In the domestic market, the recovery of domestic consumption is beginning to show positive signals; tourism to attract outsiders to tourism exports and export of services is also trending upward, especially after the introduction of new visa policies. Added to this is the recovery of public investment demand, through active disbursement of public investment capital. This will have a ripple effect on private sectors, creating demand for development.

In the world market, there are signs of some markets starting to recover, so export orders have increased in the fourth quarter of 2023. This indicates that niche and small markets are showing signs of potential recovery.

Therefore, it can be affirmed that in the challenging global context, thanks to internal strength, along with the ability to harness external resources, Vietnam has signs of achieving the growth goals set for 2024. It must be emphasized that Vietnam's investment opportunities are very new and wide open. The shift of global investment flows to other regions, including the Vietnamese market, is very strong. Particularly in investing in new technologies, such as producing high-value-added products like the semiconductor industry, Vietnam is one of the potential areas.

Obviously, these are significant opportunities, and if we make efforts and take appropriate actions to seize these opportunities, creating new breakthroughs and new resources for development is possible. Therefore, setting the growth target for 2024 is well-founded and has the potential to be realized.

In addition to the opportunities, what are the "bottlenecks" that need to be addressed to promote economic growth in our country in the near future, sir?

The first bottleneck is the global situation. If the global market does not recover and there are many adverse fluctuations, it will negatively impact domestic economic growth. On the domestic front, the biggest bottleneck is related to the system. A well-functioning and open system that can overcome the current investment project bottlenecks will unlock resources. Therefore, it requires significant efforts, especially in improving the system to create the most favorable environment for the development resources.

Finally, it is the confidence of the people and businesses in the market and the economy. If there is no confidence, people will not be willing to spend money on consumption, investors will not open their wallets for production, making it very difficult for the market to develop.

Thank you, sir!