Many positive signals help GDP reach the finish line

In 2024, the Government has determined to strive to achieve the annual GDP growth target of about 7%. According to experts, this target is quite challenging, but in the context of the economy receiving much good news both domestically and internationally, it is completely feasible.

Welcoming many favorable indicators

The first good news is that the US Federal Reserve (Fed) has lowered interest rates twice in less than 2 months, the most recent reduction was 25 basis points, bringing the US operating interest rate down to 4.50 - 4.75%. This policy has a very positive impact on an economy with a large openness like Vietnam. Ms. Nguyen Dieu Huyen, Deputy Director of the Department of National Accounts (General Statistics Office) analyzed that for Vietnam, the Fed's interest rate reduction has a positive impact on exchange rates, interest rates, import and export... and will affect growth in the coming time. The Fed's interest rate reduction helps reduce the USD/VND interest rate gap, the "greenback" can weaken against the VND, thereby reducing pressure on the exchange rate, helping to stabilize the foreign exchange market and giving the State Bank more room to operate monetary policy more flexibly. Stable exchange rates help curb inflation, create a favorable business environment, and act as a foundation for supporting the recovery of the domestic economy. Furthermore, when the Fed loosens monetary policy, it helps reduce pressure on interest rate increases, especially USD lending rates. This helps Vietnam stabilize interest rates, including both deposit and lending rates.

For export activities, the decrease in USD interest rates will stimulate the US economy to recover more positively, stimulate consumer demand in the US and many other economies in the world , thereby stimulating demand for imported goods and services from Vietnam, contributing to promoting exports. In addition, with a favorable VND/USD exchange rate, Vietnamese goods can be more competitive in the international market, thereby promoting export growth. At that time, Vietnamese enterprises will have more conditions to expand production, improve competitiveness and boost exports of key products to the US, Europe - Vietnam's leading export markets, as well as other markets in the world. "This is certainly not the last time in the monetary policy easing cycle, the Fed may lower interest rates many more times to bring the operating interest rate level back to the time before the Covid-19 pandemic," Ms. Nguyen Dieu Huyen affirmed.

Investment, export and consumption growth are the three main drivers for GDP to reach the target.

In addition, Vietnam's inflation continues to be controlled. On average, in the first 10 months of 2024, core inflation increased by 2.69% over the same period in 2023, lower than the average CPI increase (3.78%). On that basis, inflation will still be well controlled from now until the end of the year. Associate Professor, Dr. Dinh Trong Thinh, an economic expert, analyzed that the first advantage is that we have a program to stimulate consumption by reducing value-added tax. Accordingly, from July 1 to December 31, 2024, value-added tax will decrease by 2% (from 10% to 8%) for a number of groups of goods and services. This contributes to reducing the selling price of goods and services, stimulating consumption, promoting production, trade and service activities nationwide in general and in the last months of the year. Fiscal measures such as reducing 36 fees, charges, land rents, etc. also support the reduction of commodity prices, which means that inflationary pressure is reduced. One of the advantages in the price management process is that Vietnam's monetary policy is quite good. In particular, the increase in prices of state-controlled goods such as health services, education, electricity, water, etc. is also adjusted sporadically at appropriate times during the year, so it does not affect the general price and inflation does not increase.

Another good sign is that domestic enterprises are gradually recovering, the number of new orders at the end of the year is constantly increasing. According to the General Department of Customs, the export turnover in 10 months reached more than 335 billion USD, an increase of 14.9% over the same period last year. Orders to major markets all increased by double digits, in which the big driving force came from the FDI sector. Sharing about the number of orders during this period, Mr. Le Nho Thang, Director of Vest Factory, Thieu Do Company Limited, said that since the beginning of the year, the company has exported more than 1 million 340 thousand shirts, 150 thousand suits to the markets of Japan, the US and European countries. Compared to the same period, the amount of exported goods increased by about 30%. Up to this point, the company's goods have been signed for the whole year, even some orders have been signed until the end of May 2025. This means that the amount of goods will help 1,100 workers have continuous jobs from now until May 2025 with an average income of nearly 8 million VND/month.

Identify challenges early

With the above positive indicators, Dr. Can Van Luc, an economic expert, believes that Vietnam's GDP growth target of about 7% for the whole year of 2024 is feasible because the three growth drivers of investment, export and consumption are being promoted and tending to be more favorable. However, there are still many difficulties and challenges ahead that need to be identified and timely solutions to create momentum for the economy to break through in the coming time. Our biggest challenge from now until the end of the year is the story of ensuring a harmonious balance between interest rates and exchange rates; between growth and inflation control.

Meanwhile, Dr. Nguyen Quoc Viet, Deputy Director of the Institute for Economic and Policy Research, said that Vietnam's economy is facing many challenges. These include weaker-than-expected consumption and production demand in the US, a sharp slowdown in growth in Europe and slowing growth in China that could disrupt the export recovery process and weaken Vietnam's growth rate; and the widening gap between the foreign-invested economic sector and domestic enterprises. In addition, the business environment still has many potential risks, with barriers in business conditions and administrative procedures yet to be removed.

Therefore, to resolve the challenges of the economy and create momentum to achieve the GDP growth target of about 7% for the whole year of 2024, experts also said that it is necessary to accelerate the disbursement of public investment capital, thereby promoting the consumption of products of industrial sectors. At the same time, it is necessary to have a drastic fiscal policy, support the production of goods and services and encourage consumption, create a production - circulation cycle, create real demand in the economy; focus on removing difficulties and obstacles for land projects; promote the healthy development of the real estate market; promote investment resources of the economy, in which public investment is determined to lead private investment; promote new growth drivers such as innovation, digital economy, green economy, new industries, etc. This will contribute to increasing growth in the last quarter of the year and the whole year of 2024.

Source: https://thoibaonganhang.vn/nhieu-tin-hieu-tich-cuc-giup-gdp-can-dich-158038.html