CIEM offers 2 scenarios for the economy, forecasting Vietnam's GDP growth could reach 6.48%

On January 15, the Central Institute for Economic Management (CIEM) announced forecasts for a number of economic indicators for 2024. In the most positive scenario, Vietnam's GDP growth could reach 6.48%.

Overview of the Vietnam Economic Conference 2023 and prospects for 2024: Reforms to accelerate and restore growth on the morning of January 15. (Source: Investment Newspaper)

There are positive scenarios and neutral scenarios.

“A positive scenario can be achieved when policy solutions to accelerate recovery are built on fundamental macroeconomic reforms, following significant improvements in 2023. This is also the main content of the recommendation made by CIEM,” said Mr. Nguyen Anh Duong, Head of the General Research Department (CIEM), referring to the selected theme of this year’s report, “Reforms to accelerate growth recovery.”

Specifically, in scenario 2, the hypotheses are that the world 's GDP increases by 3.2%; total means of payment increases by 10%; credit increases by 16%; import prices of goods decrease by 5%; the VND/USD exchange rate of commercial banks increases by 2% and strong institutional reforms help increase growth quality, including labor productivity.

In particular, this scenario emphasizes solutions to promote business environment reform, facilitating new economic models (digital economy, circular economy, creative economy...).

“These factors will improve investor confidence, creating a basis for promoting the implementation capital of the FDI sector (including both foreign and Vietnamese sides) to increase by 5%,” Mr. Duong clarified.

This is the basis for CIEM's Report to focus on policy recommendations related to guiding the implementation of laws; especially perfecting the policy framework for digital transformation and green transformation, such as the Law on Electronic Transactions, the policy framework for testing new economic models, ensuring businesses' confidence that they can be implemented; perfecting and effectively implementing the policy framework at the national level to improve labor productivity.

Along with that, effective implementation of FTAs ​​continues to be mentioned, proposals to research and negotiate upgrading some ASEAN FTAs ​​have also been made.

In particular, appropriate macroeconomic policy management is emphasized. “This year, macroeconomic management requires art, to ensure balance in an unstable world. The government emphasizes the priority of growth, but it must be on the basis of domestic macroeconomic stability,” Mr. Duong emphasized.

Compared to scenario 2 (positive), the scenario is determined to be within reach, with economic growth forecast to reach 6.13% in 2024, the above assumptions have increased slightly. Specifically, the world economy continues to recover slowly, inflation is high, countries have not lowered interest rates on a large scale, and the supply chain of goods continues to face serious disruptions on some transport routes. The world's GDP increases by 2.9% in 2024.

However, economic experts say that the world economic variables will probably be even more difficult to predict next year. “This is an election year in many countries, with 4 billion people in the world going to the polls. We need to prepare for the possibility of changes in import-export and investment policies in many markets,” Mr. Duong emphasized.

Sharing this view, Mr. Bui Quang Tuan, Director of the Vietnam Economic Institute, mentioned the religious conflicts that took place in late 2023 and early 2024 with many concerns.

“In assessing the current context, we use the word unpredictable, but the next two years, 2024 - 2025, are probably even more unpredictable,” Mr. Tuan shared. Meanwhile, the basis for improvements in labor productivity and economic structure, according to Mr. Tuan, is still lacking.

“If spending on science and industry is still only 2%, and there are still places that return money when it cannot be spent, how can labor productivity be improved? There must be a policy push like with public investment, to create a shift in research and development, in the quality of human resources,” Mr. Tuan said.

Perhaps, these unpredictable fluctuations prompted Dr. Vo Tri Thanh, former Deputy Director of CIEM, to propose that CIEM research and add negative scenarios.

“We don't expect the worst to happen, but we need to have a plan ready to respond in all cases,” Mr. Thanh suggested.

Why not 7%?

Although agreeing with the option of adding a worse scenario to show caution in the current context, Dr. Le Duy Binh, Director of Economica Vietnam, commented that CIEM's two scenarios are still too cautious.

In Mr. Binh's view, achieving the growth targets of both scenarios and the assumptions to achieve the targets, especially for scenario 2, are challenging in the current context. But although challenging, these assumptions are achievable.

“We need a scenario with higher ambition, a scenario to create pressure for extraordinary efforts, a scenario to inspire stronger, more drastic actions. Can we, dare to think of a higher growth scenario like that, for example 7%?”, Mr. Binh raised the question.

Admitting that this figure may make many people think it is "very romantic" in the current context, Mr. Binh said that if considered carefully, except for external factors beyond Vietnam's control, the above assumptions, even for the positive scenario, are feasible and the economy can achieve it if determined right from the first weeks and months of the year.

"Thus, if there are strong efforts, extraordinary efforts, it is possible to surpass the above assumptions," Mr. Binh expressed the basis for the proposal to set an additional scenario of 7% GDP growth in 2024.

Moreover, the development of a plan for this scenario will also reveal more clearly the limitations or obstacles that need to be resolved, thereby finding extraordinary solutions. But from another perspective, Mr. Binh believes that even if the dream scenario is not achieved, the extraordinary efforts in the current context will be the best preparation and mindset for the growth period of 2026 - 2030.

“A scenario with a higher growth rate may create pressure, but it will also inspire extraordinary efforts, higher than the current normal level,” Dr. Binh expected.

(according to Investment Newspaper)

Source: https://baoquocte.vn/ciem-dua-ra-2-kich-ban-cho-nen-kinh-te-du-bao-tang-truong-gdp-viet-nam-co-the-dat-648-257514.html