Vietnam's GDP in 2024 could achieve nearly 7% growth

Nguyen Anh Duong, Head of the General Research Department at the Central Institute for Economic Management (CIEM)

Vietnam always prioritizes promoting economic growth based on macroeconomic stability, controlling inflation, and ensuring major balances. As a result, the first half of the year saw impressive achievements, including a GDP growth of 6.42%, controlled inflation, and a 14.5% increase in exports. Based on these results, what is CIEM's outlook for the economy in the second half of the year, sir?

We recognized that the global economy still faced risks and uncertainties that need monitoring, but there were also new positive trends that could have widespread impacts on many developing economies, including Vietnam. Positive trends include the movement of new technologies, economic recoveries in some countries, the prospect of lower operating interest rates, and the signing of more free trade agreements (FTAs) among economic groups, which will enhance trade and investment in the coming time.

Based on analyses and assessments of domestic and global conditions, we have updated two scenarios for the 2024 macroeconomic outlook.

Accordingly, the first scenario assumes that global economic factors continue to align with international organizations' assessments, and Vietnam maintains policy efforts similar to those in the first half of 2024. Under this scenario, GDP growth is projected to reach 6.55% in 2024; exports are expected to increase by 9.54% compared to 2023; the average CPI for 2024 is projected to increase by 4.31% compared to 2023; and the trade balance is expected to maintain a surplus of US$5.7 billion.

The second scenario assumes a more positive global economic context (faster growth recovery, increased investment in Southeast Asian countries, including Vietnam, supply chain recovery, and positive shifts in digital and green transitions). This scenario also assumes effective implementation of economic reform and management solutions in Vietnam, leading to optimal results in disbursement, public investment absorption, and credit quality; increased labor productivity; improved business environment, and enhanced national competitiveness.

Under this scenario, GDP growth is forecasted at 6.95% in 2024; exports are projected to increase by 11.64% compared to 2023; the average CPI for 2024 is expected to increase by 4.12% compared to 2023; and the trade balance is expected to reach a surplus of US$7.3 billion.

Which scenario is more likely for Vietnam to achieve, sir?

If Vietnam successfully implements its ongoing reforms, allowing these reforms to quickly impact labor productivity, public sector efficiency, and stimulate private and foreign investment, and if there is some favorable global economic development, I believe Vietnam has the potential to achieve nearly 7% GDP growth and an average CPI of 4.12% in 2024.

What solutions are needed to achieve the highest growth target for 2024, sir?

Continuing to reduce VAT in the second half of the year and increasing wages from July 1 demonstrates significant efforts from the Government, the Prime Minister, and the entire political system. These solutions are based on careful assessments of fiscal policy space. The implemented solutions and policies are in line with Vietnam's fiscal space, and there is still room to support businesses and the public.

Given the positive signs of economic recovery, it is crucial to effectively implement fiscal policies set from the beginning of the year, including disbursing public investment capital as planned and continuing to support businesses through temporary difficulties for early recovery.

We need to place trust in the business community, as they are the main drivers of economic growth. Thanks to this, we can support the business community with appropriate fiscal measures while maintain fiscal space for future shocks in the future.

Additionally, improving growth quality requires enhancing innovation capacity, adapting to major trends (digital and green transitions), and increasing labor productivity, especially in the public sector, to stimulate productivity in other economic sectors. Completing the legal framework for new economic models (circular economy, digital economy, sharing economy, creative economy) is also necessary.

Regarding macroeconomic policy management, appropriate policies are needed. Focusing solely on monetary and fiscal loosening to stimulate growth would increase inflationary pressures. Therefore, it is important to closely monitor inflation developments (impacts of wage increases and price hikes of state-managed goods) while preserving fiscal space for future shocks. Moreover, effectively implementing FTAs and facilitating business operations should remain a priority.

Thank you, sir!