Inventories in the US and worldwide are decreasing at a fairly rapid rate and the inventory problem is expected to be resolved by the end of the year. The outlook for the manufacturing sector is positive again and orders at factories in Vietnam will recover from the end of 2023.
Ms. Nguyen Hoai Thu
That is the opinion of Ms. Nguyen Hoai Thu, CEO of Securities and Bond Investment Fund, VinaCapital, when talking to the Government Electronic Newspaper.
World inventories are falling fast
According to Ms. Nguyen Hoai Thu, the bright spot in Vietnam's economic picture since the beginning of the year has been the recovery of tourism, especially the return of international tourists, which has partly supported consumption growth.
Specifically, Vietnam is witnessing a fairly strong recovery in the number of foreign tourists. In the first five months of 5, the number of foreign tourists to Vietnam has reached 2023% of the pre-COVID-63 level, of which the number of Chinese tourists has also begun to recover, reaching over 19% of the pre-COVID-18 level. As a result, real retail sales in the first five months of the year, (excluding the impact of inflation) increased by 19% year-on-year.
As for difficulties, the manufacturing sector and exporters are under great pressure from the decline in demand for "made in Vietnam" products in the US and developed markets, leading to a decrease in industrial production growth of 2,5% in the first 5 months of 2023, compared with growth of more than 9% in the same period and an average annual growth rate of over 10% in the long term. Vietnam's Purchasing Managers' Index (PMI) in May also dropped to the lowest level of the year at 5 due to a decrease in new orders at factories.
“However, when we look at the inventory situation in the US and around the world, we see that inventories in the US are decreasing at a fairly rapid rate. Specifically, the inventory of retailers in the US has increased rapidly and peaked at the end of 2022 with a growth of 20% over the same period, and this number is now rapidly decreasing to 10% and will approach 0% by the end of the year. The inventory problem is expected to be resolved by the end of this year, so we believe that the outlook for the manufacturing sector is gradually getting better and orders at factories in Vietnam will start to recover from the end of 2023,” Thu said.
The government is fierce in handling each knot of the economy
Regarding the Government's management efforts, Ms. Nguyen Hoai Thu highly appreciated the Government's drastic measures in handling each knot of the economy with the synchronization of monetary and fiscal policies.
Accordingly, to cope with the slowdown of economic growth, the Government has issued many supportive policies, from stimulating growth through stimulating consumption demand, removing obstacles in the capital market, bond market as well as real estate market.
The policies to support consumption can be mentioned are 3 times the interest rate reduction of the State Bank from the beginning of the year to now to support the reduction of lending interest rates for individuals and businesses; the policy of reducing VAT from 10% to 8% will be applied from July 1 to here; Or the Government's proposal submitted to the National Assembly recently related to increasing the visa period of international visitors to Vietnam to attract tourists...
In supporting businesses and promoting production and business, the Government has passed a series of circulars and decrees, such as: Decree 12 on extending tax and land rent; Decree 08 allows the extension of principal and interest of corporate bonds for up to 2 years so that enterprises have more time to arrange capital sources to repay bond investors; Circular 03 of the State Bank amending Circular 16 on commercial banks' repurchase of sold corporate bonds within 12 months; and Circular 02 on structuring debt repayment terms and keeping the debt group unchanged for bank loans.
Public investment - growth engine has plenty of room
Talking about the current difficulties of the Vietnamese economy, Ms. Nguyen Hoai Thu said that it is still a challenge from aggregate demand. When the demand of the main trading partners such as the US and Europe is still weak, causing export activities to slow down. Along with that, the real estate market and the corporate bond market have not recovered, which has also affected economic activities, and affected domestic demand.
The main growth drivers of an economy include: Consumption; private investment; public investment spending; and net exports.
Currently, the net export factor is under pressure from the decline in demand from the main trading partners. Although it is expected that this demand will recover in the near future, this is an objective factor that is difficult to affect and adjust in the short term.
Recent government policies have been geared towards supporting private consumption and investment. However, these factors are also directly and indirectly affected by the decline in exports, the adverse impact from the real estate market and the corporate bond market.
“But one driver that we think the government has plenty of room to boost growth is public investment spending. The government is expected to disburse public investment of about VND 755.000 billion in 2023. If this capital is effectively disbursed, it will actively support the economy's aggregate demand this year, creating spillover effects to many industries and professions, thereby promoting private investment and consumption, "said Nguyen Hoai Thu.
The CEO of the Securities and Bond Investment Fund said that the Prime Minister is very determined in directing the disbursement of public investment capital. But the backlog, the current bottleneck lies in site clearance; administrative procedures; slow construction progress; fluctuations in the prices of raw materials such as gasoline, oil, labor, etc. To overcome these problems, it is hoped that the authorities and authorities at all levels will be drastic in amending processes, regulations and dealing with the aforementioned bottlenecks, creating a premise for better disbursement of this capital in both the medium and long term.
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