The problem of choosing economic growth targets in 2024

The initial outlines of the socio-economic plan for 2024 have been revealed. The question is, in the current difficult context, what is the most appropriate goal to set for the coming year?

As the economy continues to face difficulties and disadvantages, and the world economy faces many risks in the recovery process, the 6% growth target is reasonable. (Source: Hanoi Moi Newspaper)

Three scenarios

Although GDP growth in 2023 cannot be predicted accurately yet, because the uncertainties of the world economy are still very large, the initial outlines of the socio-economic situation in 2024 have been revealed.

There are still 15 targets like the 2023 Socio-Economic Development Plan, but perhaps the GDP growth target will be one of the most concerned targets. This is understandable when in the first 3 years of the 2021 - 2025 Five-Year Plan, Vietnam's socio-economy has faced many difficulties and challenges, and 2024 is identified as the year of acceleration and breakthrough in all fields, aiming to achieve the highest level of the 2021 - 2025 Five-Year Plan targets.

In a recent Government report, the Ministry of Planning and Investment, based on both the targets of the 2021-2025 period and the effort to achieve the highest growth rate in 2023, has projected three GDP growth scenarios for 2024.

Specifically, for scenario 1 , the target is set at 6% GDP growth. This figure is based on the assumption that global growth in 2023 remains modest; the resilience of global trade and investment remains challenging.

Meanwhile, domestically, growth drivers are expected to recover unevenly. Services and the domestic market may grow quite well, but imports and exports, industrial production, especially the processing and manufacturing industry, are unlikely to see strong changes due to dependence on the world market.

As the economy continues to face difficulties and disadvantages, and the world economy faces many risks in the recovery process, the 6% growth target is reasonable.

Meanwhile, with scenario 2 , the expected growth target is 6.5%. However, it is also forecasted that the world and regional context may recover faster than forecasted by international organizations; demand from major partner markets will recover; global trade and investment may grow quite well.

Domestically, the service sector and domestic consumer market grew positively; production and business recovered, exports, investment, and foreign investment attraction grew quite well...

As for scenario 3 , based on the forecast that the world and domestic situation will change rapidly, unpredictably, and be very difficult to forecast, the expected growth target is 6 - 6.5%.

Offering 3 different scenarios, the Ministry of Planning and Investment recommends that the Government consider, comment on and select scenario 3. This scenario is believed to meet the requirements of building appropriate economic balances, aiming to successfully achieve the 5-year average growth target of 2021 - 2025.

Expect a recovery

Although expectations for economic recovery are growing, in reality, the difficulties and challenges ahead are still enormous. That is one of the reasons why organizations and economic experts both at home and abroad are still quite cautious when forecasting Vietnam's GDP growth this year, as well as next year.

In mid-July 2023, the Asian Development Bank (ADB) lowered Vietnam's growth forecast for 2023 from 6.5% to 5.8% and for 2024 from 6.8% to 6.2%. In a few days, at the end of September, ADB will release an updated report on Vietnam's economic development prospects. It is possible that ADB will continue to make adjustments, but looking at recent economic developments, it is not possible to expect optimistic forecasts for Vietnam's economy.

Meanwhile, the World Bank (WB) in early August 2023 forecast that Vietnam's GDP growth will reach 4.7% next year, then gradually recover to 5.5% in 2024 and 6% in 2025. Despite the slowdown, domestic demand is still the main growth driver in 2024, according to the WB.

“Fiscal policy, supporting aggregate demand through promoting effective public investment will boost Vietnam’s economic growth,” said Carolyn Turk, World Bank Country Director for Vietnam.

Meanwhile, Dr. Can Van Luc and a group of experts from BIDV Training and Research Institute, when preparing documents to send to the Vietnam Socio-Economic Forum 2023, scheduled to be held next week, forecast that Vietnam's GDP growth will reach about 6% in 2024 and 6.5% in 2025.

However, according to Mr. Can Van Luc, if Vietnam can better consolidate existing growth drivers and better exploit new growth drivers, the growth rate can be higher.

The new growth drivers he mentioned are from the strong development trend of the digital economy; from improving labor productivity and total factor productivity (TFP); from the private economic sector; from perfecting and improving institutional quality; developing a green economy...

In the Government report, the Ministry of Planning and Investment mentioned a series of factors that will help Vietnam's economic growth forecast more positively. For example, support policies issued in 2023 will have a delay, which will have a clearer impact on the economy; investment drivers (private investment, foreign investment, public investment, state-owned enterprises), consumption, tourism and export continue to be strongly promoted; internal problems are focused on resolving and changing more positively, especially the obstacles of enterprises, investment projects, real estate market, corporate bonds, etc.

The operation of some key, important national projects with large spillover effects will also have a positive impact on economic growth. In addition, the promulgation and effective implementation of plans will also contribute significantly to opening up new development space and growth drivers, promoting rapid and sustainable development.

In that context, we can expect a stronger economic recovery in 2024 - the year of acceleration to implement the 5-year Plan 2021 - 2025.

Source: https://baoquocte.vn/bai-toan-lua-chon-muc-tieu-tang-truong-kinh-te-nam-2024-242571.html