General Director of Vietnam Oil and Gas Group (PetroVietnam) Le Manh Hung chaired the Seminar to update macroeconomic developments and forecast economic scenarios for the fourth quarter of 2023 and 2024.
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| PetroVietnam and economic experts update macroeconomic developments, forecast for Q4/2023 and 2024. (Source: PVN) |
Attending the seminar were Dr. Vo Tri Thanh - Director of the Institute for Brand and Competitiveness Strategy Research; Dr. Can Van Luc - Chief Economist of BIDV Bank, member of the National Financial and Monetary Policy Advisory Council. Also attending the seminar were Deputy General Director of PetroVietnam Phan Tu Giang, representatives of specialized departments and member units of the Group.
Geopolitics and economics are the most complex in decades.
At the beginning of the discussion, Dr. Vo Tri Thanh updated the macroeconomic developments and forecasted economic scenarios for the fourth quarter of 2023 and 2024. Accordingly, in the latest World Economic Outlook (WEO) report, the International Monetary Fund (IMF) maintained its forecast for global real GDP growth in 2023 at 3%, but lowered its forecast for 2024 by 0.1 percentage point compared to the level given in July to 2.9%.
As such, the global economy is forecast to slow down both this year and next year compared to the 3.5% growth achieved in 2022. Inflation continues to decline globally, mainly due to lower energy prices and partly due to lower food prices.
According to the IMF's forecast, average global inflation this year will be 6.9%, down from 8.7% in 2022 and continue to decrease to 5.8% in 2024. According to Dr. Vo Tri Thanh's assessment, inflation in 2023 and 2024 will remain quite high, despite a sharp decrease in developed economies at over 2%. Core inflation in developed countries is even higher, interest rates remain high and may gradually decrease from mid-2024.
"Looking further, the global economic picture is still in a sensitive phase, the conflict in the Gaza Strip this time will have different economic impacts compared to the Russia - Ukraine incident. Notably, the strongest export item of the Middle East is oil. It can be seen that the geopolitical and economic context is the most complicated in the past decades, the fragmentation of the global economy in many aspects of economics, finance, technology... has been negatively affecting the economy", commented expert Vo Tri Thanh.
Regarding the domestic economy, Dr. Vo Tri Thanh reviewed some general features of the stock market, corporate bonds and real estate market situation since the beginning of the year and some policy efforts of the Government. Accordingly, the situation has gradually improved, liquidity is abundant, interest rates have decreased, and the macro economy is quite stable.
However, a number of factors may put pressure on the VND exchange rate in the second half of 2023, including the interest rate differential between VND and USD continuing to narrow as the Fed's operating interest rate may remain at its peak until the end of 2023 while the State Bank of Vietnam is aiming to continue lowering interest rates to support growth. Some forecasts for Vietnam's economic growth from late 2022 to early 2023 are being adjusted downward.
The forecast of achieving the target of 6.0% - 6.5% in 2023 is almost impossible because to reach 6.0% in the fourth quarter, a growth rate of 10.6% is required. With an overview of the past time and forecasts of the world and Vietnam's economy in 2024, expert Vo Tri Thanh pointed out some implications for businesses, which are "defensive, taking advantage of opportunities to overcome difficulties and catching up with trends".
Specifically, the issue of strengthening risk management, information processing and building possible scenarios, taking advantage of connecting industries, partners, government support packages, keeping up with current trends in digital transformation, green transformation...
Four main risks and challenges in 2023
Presenting on the financial market, interest rates and exchange rates in the fourth quarter of 2023 and 2024, Dr. Can Van Luc reviewed some forecasts for the world and Vietnam economy; Opportunities and challenges for businesses; Trends in interest rates and exchange rates in 2023-2024; Some policies to support the market, businesses and suggested solutions for businesses and PetroVietnam.
Accordingly, the world economy in 2023 will decline (growth of 2.1-3% from 3-3.4% in 2022), and may increase by about 2.4-2.9% in 2024; average inflation (CPI) will decrease (from 8.2% in 2022 to 5.5% in 2023 and 3.7% in 2024, according to the WB).
Economists believe that there are four main risks and challenges in 2023, which are complex geopolitical conflicts and increased strategic competition among major countries; The collapse of some banks in the US and Switzerland increases risks in the global financial and monetary markets, increasing risks of bad debt and default; Energy security and food security risks still exist; Global prices, inflation, and interest rates decrease but remain high, financial and monetary risks increase, making the global economic recovery process more fragile (a rocky recovery); negatively impacting exports, investment, consumption, international tourism and Vietnam's financial market.
For Vietnam, it is forecasted that GDP growth for the whole year of 2023 may reach over 5%, although lower than the set target (about 6.5%) but still quite high compared to many countries in the world and the region. The average consumer price index for the whole year is estimated at about 3.5%, much lower than the target of about 4.5%.
Dr. Can Van Luc said that the growth drivers for 2023-2024 are China's reopening from January 8, 2023; although the recovery is slow, it is still positive for the world economy and Vietnam. Besides, there are opportunities from the shift in supply chains and global investment capital flows, services, and consumption increasing quite positively, although slower; the 2022-2023 Socio-Economic Recovery and Development Program; public investment is promoted. It can be seen that the recovery signal from June 2023 to now is quite clear, in which the macro foundation and experience in epidemic prevention and risk management have been accumulated better; fiscal risks are at an average level, and policy space still exists.
At the same time, inflation and interest rates are decreasing, the exchange rate is basically stable, bad debt risks are under control; the stock and real estate markets show signs of recovery; Digital economy, green economy, circular economy, and energy conversion are promoted. Economic restructuring and institutional improvement are promoted (amending the Land Law, Housing Law, Real Estate Business Law, Law on Credit Institutions, etc.).
However, there are still many challenges such as the world economy is declining, growth is slow, export and investment markets are narrowing and growing slowly; international tourism is recovering slowly; private investment growth is low; Interest rates are decreasing but still high; risks in the international financial and monetary markets are increasing, negatively affecting Vietnam; Disbursement of the Recovery Program and public investment cannot have a breakthrough, businesses still have many difficulties (legal, capital, human resources, orders, etc.); Risks in the corporate bond and real estate markets need time to be processed and sanitized... Expert Can Van Luc also made some forecasts about the trend of exchange rates and interest rates, crude oil prices in 2024, energy prices and basic goods until 2025.
For businesses in general and the Oil and Gas industry in particular, Mr. Can Van Luc recommended that PetroVietnam continue to develop business scenarios with different gasoline and gas prices, and have solutions to increase supply and reserves (including national reserves and commercial reserves).
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Along with that, build an Energy Transition Strategy (an inevitable trend), especially after the promulgation of the Power Plan VIII and the National Assembly's Energy Sector Supervision Report. Promote internal digital transformation and build the PetroVietnam ecosystem, increase adaptability, manage change, manage risks (interest rates, exchange rates, finance, oil and gas prices, etc.), implement the revised Law on Petroleum; contribute to the development of the Law on Renewable Energy, the Law on State Capital Management at Enterprises (amended), etc.
After listening to analysis and forecasts from economic experts and discussions from specialized committees and member units, PetroVietnam General Director Le Manh Hung requested relevant committees and member units to continue updating and evaluating macroeconomic issues and monetary policies to include in the 2023 results, and on that basis, focus on reviewing and assessing macroeconomic risks in preparation for the 2024 plan.
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