|Processing shrimp for export at a factory of the Minh Phu Seafood Corp., Hau Giang province__Photo: VNA
Although Vietnam’s growth has slowed down amid global economic crises, the country is showing stronger performance than the majority of others in the world and continuing to be an attractive destination for foreign manufacturers, according to insiders.
Amid the complicated developments in the world economy and domestic headwinds, Vietnam’s GDP growth in the first six months of this year reached only 3.72 percent, which was below expectations.
However, many of experts held that this was a suitable growth rate in the current situation, and showed their optimism about the country’s economic recovery in the time to come.
Head of the International Monetary Fund (IMF) 2023 Article IV Mission to Vietnam Paulo Medas commented that like others in the world, the Vietnamese economy was further hit by a sharp deterioration in external demand since late 2022, with exports declining by 12 percent in the first five months of 2023. Liquidity and inflationary pressures have eased recently, but growth slowed down significantly in the first half of 2023, he said.
Vietnam’s economic growth is projected to recover in the second half of 2023, reaching around 4.7 percent for the year, supported by a rebound in exports and expansionary domestic policies. Inflation is expected to be contained below the SBV’s 4.5 percent ceiling. Over the medium term, Vietnam can return to high growth rates as structural reforms are implemented, the expert commented.
In the short term, downside risks to growth remain large, he held, stressing that that further efforts to safeguard macro-economic and financial stability and accelerate reforms will ensure that the economy remains on a safe footing. The policy mix should be re-balanced with greater emphasis on fiscal support to the economy and the most vulnerable.
Achieving Vietnam’s ambitious development and climate objectives will require accelerating reforms to improve the business environment, critical infrastructure, and invest in education, he stated.
Meanwhile, Singapore’s DBS Bank Limited noted that in the first half of 2023, the amount of foreign direct investment (FDI) poured to Vietnam rose about 30 percent, commenting that it is still an attractive destination for investors thanks to the production transition trend, free trade agreements it has signed, and its high middle-term economic outlook at 6-7 percent as well as the growing electronic ecosystem.
The FDI inflows showed that foreign investors’ confidence in the long-term potential of Vietnam has maintained.
The bank said it believes that in the second half of this year, Vietnam’s exports will increase again along with the recovery of the world electronics sector, while domestic services and tourism sector will continue to thrive and support the country’s economy.
Marco Förster, head of ASEAN advisory at Dezan Shira & Associates, a consultancy firm, said that despite the current difficulties, Vietnam is predicted to experience rapid economic growth in the medium term due to its emerging position as a leading manufacturing hub in Southeast Asia, its well-educated population, and increased capital investment.
S&P Global Ratings forecast that the Vietnamese economy will recover in the next 24 months as global demand picks up and Vietnam gradually tackles domestic challenges.
Meanwhile, in a recently-released report, the OECD predicted that the Vietnamese economy will post a 6.5 percent growth in 2023 and 6.6 percent in 2024.- (VNA/VLLF)