Ho Chi Minh City's economy grew by 4.57% in the first nine months.

Thanks to impetus from consumption, public investment, and tax exemptions and deferrals, Ho Chi Minh City's economy has continuously improved over the past three quarters, helping its GRDP grow by 4.57% in the first nine months.

At the socio-economic meeting on the morning of September 28th, the Ho Chi Minh City Department of Planning and Investment reported that growth in the third quarter continued to be higher than the previous two quarters, reaching 6.71%. This continuous improvement helped the Gross Regional Domestic Product (GRDP) in the first nine months of the year increase by 4.57% compared to the same period in 2022.

Specifically, the agriculture, forestry, and fisheries sector increased by 1.14% year-on-year; the industry and construction sector increased by 2.57%. The service sector alone made the largest contribution to the GRDP growth, increasing by 5.67% year-on-year.

According to Mr. Nguyen Khac Hoang, Director of the Ho Chi Minh City Statistics Department, domestic consumption has been the main driving force of the locality's growth since the beginning of the year. Specifically, the total retail sales of goods and consumer service revenue in the first nine months of 2023 are estimated at 871,198 billion VND, an increase of 8.6% compared to the same period last year.

"This is a bright spot, replacing the decline in imports and exports (down 14.2% in the first nine months). Domestic consumption growth is thanks to the effective implementation of shopping stimulus programs and focused promotions in the past period," Mr. Hoang said.

Industrial production is not yet truly robust but is continuously improving. Overall, in the first nine months, the industrial production index (IIP) in the area increased by 3.2% compared to the same period last year. According to Mr. Hoang, a positive sign is that the IIP has grown by over 2% for three consecutive months. A positive IIP will contribute to maintaining the domestic market, even though compared to pre-pandemic levels (2019), the city's production is only at 96.17%.

Two other factors contributing to Ho Chi Minh City's continued economic improvement include the disbursement of public investment and the impact of tax exemptions, reductions, and deferrals for businesses.

Public investment disbursement in the first nine months reached VND 20,523 billion, double that of the same period last year. However, compared to the set target, it only reached over 30% of the annual plan. Meanwhile, the target for the first six months is to reach 35% and for the whole year is to reach 95% of the total allocated capital of VND 68,487 billion.

"There are currently signs that the disbursement of public investment is slowing down. In the third quarter, only 7,000 billion VND was disbursed, which is only half of the amount disbursed in the second quarter. This also puts pressure on the fourth quarter," Mr. Hoang commented.

Mr. Nguyen Khac Hoang, Director of the Ho Chi Minh City Statistics Department, speaks at the meeting summarizing the socio-economic situation of Ho Chi Minh City in the first nine months of the year on the morning of September 28. Photo: Ho Chi Minh City Press Center.

From now until the end of the year, Ho Chi Minh City also faces several challenges. The number of newly established businesses in the first nine months was 37,224, an increase in quantity but a decrease in registered capital. The number of dissolved businesses decreased, but the number of businesses temporarily suspending operations increased. Also during this period, foreign direct investment (FDI) attraction decreased by 34.1%, reaching nearly $2 billion.

According to Mr. Nguyen Khac Hoang, the economy improved in the second and third quarters, but the pressure in the fourth quarter is immense in order to achieve the annual plan. If the goal is to achieve a 7.5% GRDP growth rate in 2023, a 15% increase is needed in the final quarter. Similarly, achieving a growth rate of 6.5% or 5.5% would require results of 11% and 9% respectively in the last three months of the year.

Mr. Vo Van Hoan, Vice Chairman of the People's Committee of Ho Chi Minh City, also assessed that it would be difficult to achieve the 7.5-8% GRDP target this year. This is because even if the GRDP in the fourth quarter reaches double digits, it would only contribute to an approximate 7% growth rate for the whole year.

According to him, while local difficulties remain unresolved, the global situation is somewhat unfavorable, such as slowing growth in China, the interest rate policy of the US Federal Reserve (Fed), and weak demand in Europe. Therefore, foreign trade and FDI attraction are projected to continue to decline in the near future. These factors will impact exports and imports, inflation, and consumption in Ho Chi Minh City.

If it is extended for another 1-2 years, according to him, it will become even more difficult. "At this time, the city needs to make more effort to support businesses in maintaining their existing markets, while also finding new markets, especially in the US and Canada, which are very open," Mr. Hoan said.

Overall, Ho Chi Minh City Party Secretary Nguyen Van Nen assessed that the growth results over the past nine months are still "very encouraging" given the complex and unpredictable global and regional situation, and the uncertainty of the global economy. Meanwhile, Ho Chi Minh City, with its high degree of trade openness and deep integration, is directly affected.

Regarding solutions, Secretary Nguyen Van Nen said that the Standing Committee of the City Party Committee will meet in mid-October to discuss ways to improve public investment, private investment, and foreign investment, as well as to remove difficulties and obstacles. "Public procurement, frugal spending, and spending wisely are commendable, but spending on essential public activities is also a responsibility," he added.

He argued that it is necessary to continue stimulating domestic consumption and tourism, and to support the business community in attracting capital and resolving land-related issues. He noted that during this period of transition to a new growth model, Ho Chi Minh City will continue to make maximum efforts, but will not prioritize chasing numbers; instead, it must have a long-term development vision for the medium to long term.

To ensure Ho Chi Minh City's economy continues its upward trend in the remaining months of the year, Mr. Nguyen Khac Hoang, head of the Statistics Department, believes it is necessary to continue promoting the service sector. "Domestic demand is currently quite low compared to its potential; normally it increases by up to 13% but is currently only around 8%, so we need to focus on implementing large-scale, focused, and long-term promotional programs. Along with that, we need to accelerate the disbursement of public investment in the fourth quarter to boost growth and create a foundation for 2024," Mr. Hoang stated.

Mr. Truong Minh Huy Vu, Deputy Director of the Ho Chi Minh City Development Research Institute, suggested that in addition to offline channels, demand should be further stimulated through online channels, such as e-commerce platforms. Along with that, public spending and public investment should also accelerate in the fourth quarter to provide impetus for demand and production.

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