Prime Minister: GDP in 2023 will increase by over 5%

The Prime Minister said this year's GDP growth was only over 5%, lower than the level assigned by the National Assembly, due to the economy suffering unprecedented double impacts, despite efforts to resolve the situation.

Reporting to the National Assembly on October 23, Prime Minister Pham Minh Chinh said that GDP growth in 9 months reached 4.24%; the consumer price index (CPI) increased by 3.16% after 9 months. The currency and foreign exchange markets were basically stable, interest rates decreased. Imports and exports increased gradually over the months, with a trade surplus of nearly 22 billion USD in 9 months.

Disbursement of public investment capital by the end of September reached 51.38% of the plan, nearly 4.7% higher than the same period, equivalent to VND110,000 billion. Realized FDI capital was about 16 billion USD, up 2.2%.

The 2023 budget deficit is estimated at about 4% of GDP, public debt at 39-40% of GDP, government debt at 36-37% of GDP; national foreign debt at 37-38% of GDP; the government's direct debt repayment obligations at about 20-21% of total state budget revenue. These targets are all within the ceiling allowed by the National Assembly.

The budget saves 560,000 billion VND for salary reform in 3 years (2024-2026).

However, the Government leader admitted that the economy has been affected by adverse external factors and internal limitations that have lasted for many years. The competitiveness and resilience of the economy are still limited.

Prime Minister Pham Minh Chinh reports on socio-economic development in 2023 and orientations for 2024 at the opening session of the National Assembly on the morning of October 23. Photo: Hoang Phong

In the face of difficulties, Prime Minister Pham Minh Chinh said that the Government will continue to prioritize promoting growth, maintaining macroeconomic stability, controlling inflation and ensuring major balances of the economy. The proposed solutions will promote three growth drivers, including investment, consumption and export.

"The Government is making efforts and coming up with many solutions to achieve GDP growth of over 5% this year (this level is lower than the target assigned by the National Assembly (6.5%). Inflation is around 3.5-4%," said the Prime Minister.

National Assembly Chairman Vuong Dinh Hue, in his opening speech, also acknowledged that this year's difficulties are greater than the advantages. "We continue to face the "double impact" from negative external factors, the accumulated internal weaknesses of the economy are more clearly and severely exposed," he said.

On behalf of the agency reviewing this content, Chairman of the National Assembly's Economic Committee Vu Hong Thanh commented that this year's growth target of 6.5% is a big challenge and not easy to achieve in the current context. Pressure on macroeconomic management, inflation and domestic growth increased in the last months of the year.

Five socio-economic development targets were not met, including many indicators reflecting growth quality, such as the growth rate of social labor productivity and the proportion of processing and manufacturing industries in GDP. This is the third consecutive year that the target of social labor productivity growth rate has not been met (in 2021-2022, this target was 0.09-0.4% lower than the target).

The "health" of businesses is still difficult when the number of dissolutions and bankruptcies is high, with a total of 135,100 units in the first 9 months. That means an average of about 15,000 businesses leave the market each month, while the number of new establishments decreases in terms of registered capital and labor.

"Businesses face market difficulties, lack of orders, workers losing jobs in many industrial parks and increasing production and logistics costs," the Economic Committee commented.

On the other hand, the economy is thirsty for capital but has difficulty absorbing it even though the interest rates for deposits and loans have decreased. Credit growth is low, increasing only 5.91% as of September 21.

The financial and monetary markets still have potential risks; increasing bad debts put pressure on the cost of capital and profits of the banking sector. By the end of July 2023, the on-balance sheet bad debt ratio was 3.56%, more than double the same period in 2022 (1.7%).

The ratio of bad debt on the balance sheet, debt sold to VAMC that has not been processed and potential bad debt of the banking system was 5.22% by the end of July. "The current difficult situation, if not improved, is forecasted to increase bad debt in the coming time and erode the financial capacity of banks," Mr. Thanh commented.

GDP growth will hardly exceed 6%, also predicted by the Ministry of Planning & Investment and experts at the Vietnam Economic Forum in the middle of this month, when many of the economy's main growth drivers in the first 8 months of 2023 show signs of slowing down, declining and being under great pressure from the outside.

In the remaining months of this year, the Economic Committee noted that the Government needs to continue to clear economic bottlenecks; perfect mechanisms to improve the investment and business environment. "It is necessary to accurately and accurately assess the current situation of enterprises, thereby promptly and accurately removing existing problems and obstacles," said Mr. Vu Hong Thanh.

Production and business are facing many difficulties, jobs are affected, the inspection agency recommends that the Government quickly have policies to support workers and affected families, ensuring social security.

In 2024, the economy is forecast to still suffer double negative impacts and face more challenges . The government sets a target of GDP growth of 6-6.5% next year, per capita income of 4,700-4,730 USD and inflation of 4-4.5%. Credit growth of over 15%; public investment disbursement of over 95% of the plan; reduction of 10% in administrative compliance costs in business.

The Prime Minister pledged "not to let there be a shortage of electricity for production, business and consumption".

In addition to operating a flexible monetary policy and reasonably expanding fiscal policy, the Prime Minister said the Government directed the banking system to further reduce lending interest rates, direct credit to growth drivers (investment, consumption, export) and handle bad debt, ending cross-ownership in the banking system.

At the same time, promote expressway projects to ensure the completion of the target of having over 3,000 km by 2025. The North-South high-speed railway project will be submitted by the Government to competent authorities next year.

In particular, Prime Minister Pham Minh Chinh emphasized tightening discipline, increasing decentralization and delegation of power, and rectifying the situation of avoiding and shirking responsibility, protecting cadres who dare to think, dare to do, and dare to take responsibility.

With this goal in mind, Chairman of the Economic Committee Vu Hong Thanh suggested that the Government assess the feasibility of the GDP growth target, as well as the completion of the target for the entire term. Similarly, the State budget estimate and revenue estimate should be more proactive in order to increase development investment spending and reduce the budget deficit.

Vnexpress.net