Overcoming difficulties and obstacles.

According to the World Bank, reduced external demand is putting pressure on the Vietnamese economy in 2023. However, with efforts to overcome difficulties and the involvement of the entire political system, the growth outlook for the end of 2023 and 2024 remains positive.

Triển vọng kinh tế Việt Nam: Khắc phục khó khăn, vượt qua trở ngại. (Ảnh: TL)

Mr. Nitin Kapoor, Co-Chairman of VBF, speaks at the Vietnam Economic Outlook Report for Q2 2023 event. (Source: VBF)

On the afternoon of September 8th, in Hanoi , the Vietnam Business Forum (VBF) held the Vietnam Economic Outlook (VBF) Q2/2023 report event, both in-person and online.

The event featured discussions with speakers from the World Bank in Vietnam, Mizuho Bank Hanoi, Dragon Capital Fund, and real estate management company CBRE, along with the participation of over 200 delegates both in person and online. Experts shared their assessments of Vietnam's economic developments in the first months of 2023 and the growth prospects for 2023 and 2024.

Speaking at the event, Mr. Nitin Kapoor, co-chairman of VBF, noted that despite the challenging global geopolitical and geoeconomic landscape, Vietnam's resilience remains a bright spot in the region. According to him, this resilience is thanks to the support of government agencies, credit institutions, research organizations, and the business community.

Meanwhile, Andrea Coppola, the World Bank's Chief Economist in Vietnam, stated that the global slowdown is evident, and therefore, Vietnam's main trading partners such as the US, the Eurozone, and China are also being affected.

The World Bank forecasts global economic growth of 2.1% in 2023 and 2.4% in 2024, while the US will grow by 0.7% and 1.2%, the Eurozone by 0.4% and 1.3%, and China by 5.6% and 4.6%.

According to the World Bank, the global economic slowdown has put pressure on the Vietnamese economy, particularly on export-related activities, which contribute nearly half of Vietnam's growth, posing risks to the economy. Difficulties have also affected exports of manufactured goods to the United States, the European Union (EU), and China.

Furthermore, the base effect (i.e., the unexpected fluctuations in inflation figures) gradually diminished in the post-Covid-19 period, and the increase in uncertainties also affected domestic demand. Recent retail sales growth slowed to below pre-Covid-19 levels (2019), while private sector investment declined sharply. The decline in external demand and weakening domestic demand led to a noticeable slowdown in growth in the first half of 2023.

Specifically, in terms of trade, compared to the same period in 2022, exports in the first half of 2023 decreased by 12%, and imports decreased by 17.9%. In addition, consumer price inflation (CPI) decreased rapidly (2% in June 2023), while core inflation remained quite high (4.3%).

However, the first six months of the year also saw some positive developments, such as the continued stability of foreign direct investment (FDI) disbursement and improved public investment compared to the first half of 2022.

Triển vọng kinh tế Việt Nam: Khắc phục khó khăn, vượt qua trở ngại. (Ảnh: HA)

Speakers discuss at the event. (Photo: HA)

According to the World Bank report, Vietnam's economic growth, although not yet robust in 2023, will gradually recover in 2024 and 2025. Regarding external demand, although weaker in the first half of 2023 than previously expected, global growth will gradually pick up from the first quarter of 2024. This will have a positive impact on the Vietnamese economy.

Sharing the same view, Mr. Motokatsu Ban, Director of Mizuho Bank Hanoi, stated that Vietnam's economy has slowed down recently, especially in a complex macroeconomic environment.

Regarding short-term prospects, according to Mr. Ban, Vietnam's economy is highly open, so its development is closely linked to global economic growth. The representative from Mizuho Hanoi stated that, in order to support economic activities, the Vietnamese government has taken concrete actions to support the real estate and construction sectors. These are important points and will be driving forces for Vietnam's economic growth in the coming period.

In the current context, the World Bank has put forward several specific policy recommendations regarding fiscal, monetary, and credit policies, as slowing economic growth necessitates effective short-term policy action.

In addition, according to the World Bank, Vietnam needs structural reforms to ensure sustainable recovery, such as: investing in energy transmission; efforts to withstand global climate change should take into account adaptation and risk mitigation in investment decisions; and greening production through carbon taxes and other fiscal tools.

Meanwhile, the Director of Mizuho Hanoi commented that the Vietnamese economy has a solid foundation and prospects for accelerated growth in the coming years. However, currently, unfavorable global developments will have a negative impact, but it is hoped that from 2024 onwards, these unfavorable factors will lessen and the economy will accelerate in the following years.

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