Maintain macroeconomic stability, create a foundation for breakthrough

Although our country's economic growth (GDP) in the first quarter is estimated to increase by 3.32% over the same period in 2022, which is considered quite good compared to the average of countries in the world, it is still lower than the scenario in Resolution 01/NQ-CP on main tasks and solutions to implement the Socio-Economic Development Plan.

Photo caption — *Illustration photo: VNA*

State budget estimates and improvement of the business environment, enhancement of national competitiveness in 2023 (scenario is 5.6%). Therefore, to achieve the annual GDP growth target of 6.5%, great efforts are needed from ministries, branches and localities to make up for the first quarter. The prerequisite is to maintain macroeconomic stability, which is the fundamental factor for breakthrough. Forecast of 2 growth scenarios According to the report of the Ministry of Planning and Investment , in the first quarter, the macro economy continued to be stable. Core inflation was controlled at an appropriate level, the growth rate of the consumer price index (CPI) tended to decrease gradually, with an overall increase of 4.18% in the first quarter. The monetary market was basically stable, reducing the lending interest rate level, stabilizing the exchange rate in line with market developments, ensuring the safety and liquidity of the banking system. In addition, production and business activities were maintained, with some sectors seeing a fairly good increase. Agricultural production in the first quarter increased by 2.52% over the same period; the service sector continued to recover positively, with added value in the first quarter increasing by 6.79% over the same period last year... Along with that, the Government and the Prime Minister have implemented medium and long-term solutions, improving the investment and business environment, promoting disbursement of public investment capital, attracting foreign investment, private investment, and unlocking investment resources for the economy. The labor and employment situation in the first quarter recovered positively; unemployment and underemployment rates decreased, and labor income increased compared to the previous quarter and the same period last year.

In particular, foreign affairs have been proactively and actively implemented, contributing to enhancing bilateral and multilateral partnerships, promoting economic diplomacy, attracting FDI, and reopening the Chinese tourist market. However, in addition to the achievements, due to increasingly unfavorable and unpredictable developments in the world, economic growth in the first quarter was lower than the scenario in Resolution 01/NQ-CP (the scenario is 5.6%). Accordingly, production, business, industrial production, export, investment, FDI attraction, etc. have encountered many difficulties. FDI capital registered in Vietnam in the first quarter decreased by 19.3% compared to the same period last year. Credit growth as of March 28 increased by only 2.06%, showing that production and business are facing difficulties, the capital absorption capacity of enterprises and the economy continues to be difficult. The number of newly registered and resuming businesses in the first quarter reached nearly 57,000 (down 5.4% year-on-year), lower than the number of businesses withdrawing from the market (over 60,000 businesses, up 17.4% year-on-year). Total import-export turnover, exports and imports of goods in the first quarter all decreased and exports to major markets decreased... Based on the results of the first quarter, forecasting the situation in the second quarter and the whole year, the Ministry of Planning and Investment forecasts 2 growth scenarios. Scenario 1, economic growth for the whole year is expected to reach 6% (0.5 percentage points lower than the target set by the National Assembly), growth in the second, third and fourth quarters according to the scenario in Resolution No. 01/NQ-CP (6.7%, 6.5% and 7.1% respectively). If the growth rate in 2023 reaches only 6%, it will put great pressure on the 5-year growth target of 2021 - 2025 (6.5 - 7%), requiring an average growth rate of nearly 8%/year in 2024 - 2025 to reach the 5-year target of 6.5%. Scenario 2, to achieve the annual economic growth target of 6.5%, economic growth in the second quarter is 6.7% (equal to the scenario in Resolution 01/NQ-CP), growth in the third and fourth quarters is 7.5% and 7.9% respectively (1% and 0.8% higher than the scenario in Resolution 01/NQ-CP). The Ministry of Planning and Investment recommends choosing scenario 2, striving for a full-year growth of 6.5%, creating momentum for the following years to contribute to achieving the 5-year growth target of 2021 - 2025 from 6.5 - 7%. "This is a very challenging scenario, requiring great efforts and determination from the entire political system. Currently, most of the policies to support businesses and people under the Socio-Economic Recovery and Development Program have expired or are of low efficiency. Therefore, it is necessary to soon issue new support policies such as reducing taxes and fees, continuing to strive to reduce lending interest rates to stimulate growth and support production and business," Minister Nguyen Chi Dung emphasized. Focus on maintaining macroeconomic stability At the regular Government meeting in March, Prime Minister Pham Minh Chinh emphasized that from the beginning of the year, we have assessed that the situation has more difficulties and challenges than opportunities and advantages, and so far, this assessment has proven to be correct. Accordingly, the Prime Minister emphasized that in all cases, it is necessary to maintain macroeconomic stability, control inflation, promote growth, ensure major balances, political stability, and social order and safety. Regarding solutions in the coming time, the leader of the Ministry of Planning and Investment said that in order to achieve the growth target of 6.5% for the whole year of 2023 assigned by the National Assembly , great efforts and attempts are needed; in which, it is necessary to continue to consistently target maintaining macroeconomic stability, controlling inflation, promoting growth, and ensuring major balances of the economy.

"This is the fundamental factor for implementing other solutions to promote economic growth in the second quarter and the last quarters of the year," said Deputy Minister of Planning and Investment Tran Quoc Phuong. Among the macro solutions, Deputy Minister Tran Quoc Phuong said there are two key policies: flexible, proactive, timely, effective monetary policy, closely coordinated with focused, key fiscal policy and other macro policies.

With the impact of world currencies, Vietnam's monetary policy is facing many challenges. In the management process, it requires sensitivity as well as timeliness and flexibility, ensuring resources for economic sectors to operate stably and develop. In addition, the Government, ministries, sectors and localities continue to review policies and remaining growth drivers, taking favorable areas to compensate for other areas, such as services, good growth in agriculture will support the manufacturing sector, construction industry, etc. Along with that, promoting public investment disbursement also needs to be concerned by ministries and local sectors. "This is also a key issue of investment motivation for economic growth nationwide", Deputy Minister Phuong stated. Notably, the Ministry of Planning and Investment has recommended that the Government needs to resolve the problem right from the grassroots level, and must proactively deploy solutions right at the local level. Accordingly, provinces and cities should also establish special working groups that can immediately resolve local problems to expand production and business. Only then can growth be achieved in the following quarters. According to Deputy Governor of the State Bank Pham Thanh Ha, the State Bank has also closely followed the market, proactively reducing operating interest rates and priority lending interest rates. Currently, operating interest rates and key market interest rates have basically been reduced with the goal of supporting economic growth, not being subjective about inflation. Economic expert Nguyen Bich Lam, former General Director of the General Statistics Office, said that the Government has clearly analyzed the causes, difficulties and limitations that need to be overcome. In the coming time, in addition to urgently and resolutely directing the disbursement of public investment capital and maximizing this important growth driver, the Government needs to issue and implement a number of new solutions to remove difficulties and obstacles for investment projects, production and business of the enterprise sector and investment sectors. "The economic growth in the second quarter of 2023 is forecast to be much higher than in the first quarter of 2023, creating a foundation for a breakthrough in the second half of the year, aiming to achieve the growth target of over 6% for the whole year of 2023," said economist Nguyen Bich Lam.