No retreat, determined to achieve economic growth target of 6.5%

Despite facing numerous difficulties and challenges, the government is determined to achieve its growth target of 6.5% this year.

According to forecasts from the Ministry of Planning and Investment , the processing and manufacturing industry will continue to recover positively. Photo: Duc Thanh

Choose the 6.5% scenario.

The Ministry of Planning and Investment has updated two economic growth scenarios for 2024, following the official release of socio-economic statistics for the first quarter of 2024. The first-quarter GDP growth is estimated at 5.66%, higher than the scenario outlined in Government Resolution 01/NQ-CP.

Under Scenario 1, the projected annual economic growth is 6%, which falls within the lower end of the target set by the National Assembly (6-6.5%). To achieve this figure, the remaining nine months of the year must grow by approximately 6.12%, with Q2 growth at 5.85%, and Q3 and Q4 growth at 6.22% and 6.28% respectively, reaching the lower end or even lower than the scenario outlined in Resolution No. 01/NQ-CP.

Under Scenario 2, the annual economic growth rate reaches 6.5%, close to the upper limit of the target set by the National Assembly. Accordingly, the growth rate for the last nine months of the year must be around 6.75%; with Q2 growth at 6.32%, and Q3 and Q4 growth at 6.79% and 7.08% respectively. Growth in each quarter is approximately 0.1 percentage point higher than the upper limit of the scenario set out in Resolution No. 01/NQ-CP.

“The Ministry of Planning and Investment recommends choosing scenario 2. Under more favorable global and domestic conditions, we will continue to research and implement new fiscal and monetary support policies… to strive for the highest possible growth rate,” Minister of Planning and Investment Nguyen Chi Dung said at the regular government meeting in March and the recent online government conference with localities.

Prime Minister Pham Minh Chinh then emphasized the need to strive for the highest and best performance, aiming to achieve and surpass the targets and indicators for 2024, especially the growth target of approximately 6.5%.

The question is, can the economy achieve this figure? When proposing scenario 2, Minister Nguyen Chi Dung stated that the Ministry of Planning and Investment based its decision not only on the results of the first quarter, but also on forecasts for the following quarters.

According to forecasts from the Ministry of Planning and Investment, the processing and manufacturing industry will continue its positive recovery, with increasing orders. This creates favorable conditions for further accelerating economic growth and achieving development goals in 2024, reducing pressure on 2025, the final year of the 2021-2025 Socio-Economic Development Plan.

In fact, according to the results of the survey on business trends of manufacturing enterprises in the first quarter of 2024, conducted by the General Statistics Office, 45.4% of enterprises assessed that the trend in the second quarter would improve compared to the first quarter of 2024. Regarding orders, 42.2% of enterprises expected an increase in orders in the second quarter compared to the first quarter. As for export orders, 36.9% of enterprises expected an increase in new export orders in the second quarter of 2024.

Thus, the trend in production and business is more positive. Similarly, the service and tourism sectors are also projected to continue recovering in the following quarters. This provides a basis for expecting that GDP growth in the remaining quarters of the year will continue the pattern of each quarter being higher than the previous one, so that the whole year can achieve the target of 6.5%.

Never back down.

The determination is great, but the challenges are considerable, as both the global and domestic economies harbor risks. The World Bank, in its recent East Asia and Pacific Economic Update report, maintained its forecast for Vietnam's growth in 2024 at 5.5%.

Mr. Aaditya Mattoo, World Bank economist for East Asia and the Pacific, stated that the World Bank based this figure on factors such as the potential for global trade recovery and Vietnam's own economic resilience. Mr. Mattoo also mentioned difficulties in the real estate sector, as well as the lack of significant improvements in public investment disbursement.

Data from the Ministry of Finance shows that in the first quarter of 2024, the disbursement of public investment capital was positive, estimated at VND 89,874.751 billion, equivalent to 13.67% of the plan assigned by the Prime Minister, higher than the same period in 2023 both in relative terms (last year reached 10.35%) and absolute terms (VND 16,500 billion higher). However, difficulties have also emerged, with a shortage of sand for leveling the ground at key projects. This is an issue that needs to be actively addressed in the coming time to strongly promote the growth of public investment.

Meanwhile, S&P Global has just announced that the Purchasing Managers' Index (PMI) for Vietnam's manufacturing sector, after a slight improvement in the first two months of the year, has fallen back below the 50-point threshold, reaching 49.9 points.

“Vietnam’s manufacturing growth slowed in March, as weaker demand hampered the rise in new orders and output. This weak demand was also reflected in PMI price indicators, with slower input cost increases and lower selling prices,” said Andrew Harker, Chief Economist at S&P Global Market.

This means that, from a certain perspective, the economic recovery remains uncertain and fraught with challenges. Speaking at the regular government meeting in March 2024 and the recent online government conference with localities, Minister Nguyen Chi Dung also pointed out the challenges, difficulties, and worrying aspects of the economy.

“Reduced purchasing power and people tightening their spending reflect the cautious and frugal spending habits of businesses and individuals in the face of current economic difficulties. Low domestic market demand and high competition are the biggest challenges for manufacturing businesses today,” Minister Nguyen Chi Dung said.

The minister also mentioned that as many as 74,000 businesses had to withdraw from the market in the first quarter; the real estate and bond markets are still facing difficulties; and the risks of inflation and exchange rates, to emphasize the challenges facing the economy.

"Continue to strongly promote and renew growth drivers in investment, consumption, and exports; maximize the exploitation of new growth drivers from digital transformation, green transformation, etc.," Minister Nguyen Chi Dung said, affirming that disbursing public investment must be considered a crucial political task to promote disbursement, thereby boosting economic growth.

In the first quarter of 2024, Ho Chi Minh City achieved a GRDP growth rate of 6.54%. This economic powerhouse is determined to achieve a growth rate of 7.5-8% this year. “We will continue to be proactive, innovative, and adapt flexibly, both accelerating the disbursement of public investment capital and removing obstacles to promote private investment, especially in the real estate sector, key projects, stimulating consumer demand and tourism to boost economic growth,” said Mr. Phan Van Mai, Chairman of the People's Committee of Ho Chi Minh City.

Meanwhile, Chairman of the Quang Ninh Provincial People's Committee Cao Tuong Huy said that after achieving a GRDP growth rate of 8.8% in the first quarter, Quang Ninh will strive to achieve double-digit growth for the whole year. "We are determined to disburse 100% of public investment capital, with 50% disbursed in the first six months and 80% in the first nine months, to boost economic growth," Mr. Huy said.

When determination reaches every ministry, sector, and locality, the economy can achieve the growth rate that the Government has chosen and is determined to achieve.

Source