Vietnam's economy could lead ASEAN growth this year

Prestigious organizations around the world predict that Vietnam 's GDP growth in 2023 could top that of other countries in the Southeast Asian (ASEAN) region.

2023 will bring many challenges for Vietnam's economy . Photo: Nam Khanh

The economy faces many "headwinds"

The Executive Board of the International Monetary Fund (IMF) has just released the latest forecasts on the Vietnamese economy. Accordingly, the strong recovery of the Vietnamese economy in 2022 has been slowed down due to "headwinds" at the end of last year and the first half of this year. The IMF forecasts that the economic growth momentum in 2023 will come from recovering exports and easing policies (especially fiscal policy). Inflation is expected to remain under control below the target of 4.5%. Vietnam can return to high growth in the medium term with the support of structural reforms.

The Executive Directors welcomed the swift actions taken by the Vietnamese authorities to maintain economic stability in the face of challenges both at home and abroad. However, risks remain elevated and further efforts are needed to safeguard macroeconomic stability and promote deep reforms to address vulnerabilities and ensure strong, green and inclusive growth over the medium term.

In addition, given limited room for monetary policy easing, fiscal policy should play a key role in supporting economic activity if needed. The IMF recommends strengthening the fiscal framework, budgeting processes, and increasing revenue collection over the medium term to support the ambitious socio-economic development plan.

The IMF commended the authorities for effectively managing inflation risks, but stressed that monetary policy should remain prudent in the face of complex circumstances and limited policy space. It also commended exchange rate flexibility and encouraged continued progress in this area, along with modernizing the monetary policy framework.

GDP growth will remain optimistic

Realizing that 2023 will bring many challenges to the Vietnamese economy, experts from the Asian Development Bank (ADB) have just forecast that Vietnam's GDP growth will reach 5.8%, a slight decrease compared to April 2023. However, ADB believes that Vietnam's GDP growth in 2023 will still be the highest compared to other countries in the Southeast Asian region. By 2024, with an economic growth forecast of 6%, Vietnam's GDP growth will rank second in the Southeast Asian region, after the Philippines (6.2%). Inflation is also forecast to decrease, possibly at 3.8% in 2023 and 4% in 2024.

In its latest report, the Finnish investment fund Pyn Elite Fund stated that Vietnam is one of the fastest growing economies in Asia. The fund expects Vietnam's economic growth rate to continue at 5 - 7% annually in the coming time. The annual profit growth rate of listed companies will remain at 12 - 25%...

Regarding exchange rates, ADB chief economist Nguyen Ba Hung assessed that the State Bank is operating flexibly, expanding the band, and exchange rate fluctuations are within the pre-set band. Therefore, the State Bank has not encountered any policy difficulties with exchange rates. In the context of relatively stable prices and weak demand, policy coordination can help the economy recover effectively. In the short term, it is necessary to implement supportive monetary policies and expansionary fiscal policies.

“Slow credit growth shows that monetary policy easing must be closely coordinated with fiscal policy implementation to effectively promote economic activity,” said ADB chief economist Nguyen Ba Hung.

Laodong.vn