ADB economist 'gives advice' to boost GDP growth

Positive growth but still many pressures

Mr. Nguyen Ba Hung - Economist of Asian Development Bank in Vietnam

Although GDP growth in the first quarter of 2025 has achieved positive signals, achieving the growth target of 8% or more in 2025 is still a challenge for Vietnam.

To clarify this issue, a reporter from Cong Thuong Newspaper had an interview with Mr. Nguyen Ba Hung - Economic Expert of the Asian Development Bank (ADB) in Vietnam.

- How do you evaluate the GDP growth results of Vietnam in the first quarter of 2025, which were just announced by the General Statistics Office (Ministry of Finance) in early April 2025?

Mr. Nguyen Ba Hung : Vietnam's GDP in the first quarter of 2025, as announced by the General Statistics Office (Ministry of Finance), increased by 6.93% over the same period last year, this result is considered the highest in the first quarter in the period 2020-2025.

The driving force for GDP growth in the first quarter of 2025 comes from many factors such as import and export, foreign investment attraction, industrial production index, credit growth, etc. One driving force that cannot be ignored is the Government's moves in reforming the apparatus and the investment and business environment.

However, if we look at the growth drivers of the first quarter of 2025, it can be affirmed that it will be very difficult to achieve this growth rate in the second quarter of 2025. Because many drivers in the first quarter will no longer be drivers in the second quarter, especially the trade factor. This makes the prospect of GDP growth for the whole year of 2025 reaching 8% or more according to the set target not easy.

Accordingly, to improve economic growth in the last months of the year, the Government must implement relatively strong reforms to compensate for potential shortfalls in the coming time.

Supporting production and business enterprises will create conditions for workers to increase their income. Illustrative photo

Focus on solutions to stimulate economic growth

- Prime Minister Pham Minh Chinh has just directed the State Bank to urgently develop and implement a preferential credit package of about VND500,000 billion, to promote investment in science - technology, innovation, and strategic infrastructure. Many opinions say that this is the largest credit package ever and will have a positive impact on economic growth in the coming time. What is your opinion on this issue?

Mr. Nguyen Ba Hung : Although the new VND500,000 billion credit package is still under construction and there is not enough detailed information about its implementation, in my opinion, if implemented effectively, it will create positive momentum for Vietnam's economic growth in the coming months.

Why is that? Because in terms of direction, I think the credit package is in line with the general goal of stimulating domestic demand. Stimulating domestic consumption will have a positive impact on Vietnam's economic growth.

In addition, focusing on infrastructure development is also the right goal to enhance the competitiveness of the Vietnamese economy in the medium and long term. When infrastructure investment is better, it leads to a reduction in operating costs and logistics costs for the economy, which is a very good signal.

In addition, the orientation of increasing spending on innovation is also very suitable for the current needs of the Vietnamese economy. The VND500,000 billion credit package focusing on development investment is also appropriate, because Vietnam's spending on development investment is at a relatively low level, only 0.4% of GDP.

In terms of scale, the VND500,000 billion credit package will account for 4 - 4.5% of Vietnam's GDP, this scale is also completely within the fiscal space and the Government can completely balance it.

By the end of 2024, Vietnam's public debt ratio is estimated to be below 36% of GDP. If we add about 4 - 4.5% of GDP from the VND500,000 billion credit package, even in the scenario where the Government has to borrow the entire amount, public debt will only exceed 40% of GDP - still quite far from the allowable public debt ceiling of 60%. This shows that Vietnam's fiscal space is still quite large, with enough capacity to balance and mobilize resources. Therefore, this is considered a positive solution, contributing to promoting infrastructure development and supporting economic growth in the coming time.

However, to achieve practical effectiveness and stimulate economic growth, we must focus on implementing the credit package effectively and quickly. If it can be implemented in 2025, it will stimulate growth very well. If it cannot be implemented and drags on for many years, the effectiveness of stimulating growth will also be limited.

Economic growth stimulus solutions support businesses to boost production and business. Illustrative photo

- In addition to investing in infrastructure and science and technology , the Vietnamese government also continues to reduce value-added tax (VAT) to stimulate domestic consumption to support economic growth targets. In addition to these solutions, what support measures does Vietnam need to stimulate domestic consumption in the coming time?

Mr. Nguyen Ba Hung : Reducing VAT will have a positive effect, supporting people's purchasing power. However, in my opinion, a more positive measure would be to strengthen support reforms to increase people's income.

So support programs and public investment expenditures will create a spillover effect, because it enhances investment and business production activities, thereby increasing people's income, so this is a very positive support channel for economic growth.

In addition to promoting public investment, we need more support related to human resource development through skills training for workers so that they can move to other industries and sectors and create more jobs. In addition, it is necessary to implement social security support policies through support for those who lose their jobs or are in the process of changing jobs so that they can maintain their lives.

It can be said that in support programs, support to increase people's income will bring better spillover effects, so I think that the Government can combine flexible measures to promote production and business activities of enterprises, thereby increasing people's income, thereby stimulating spending and spillover effects on economic growth.

It can be seen that among the support programs, policies that help increase people's income often create stronger spillover effects. Therefore, in my opinion, the Government should flexibly combine many different solutions to promote production and business activities of enterprises, thereby improving people's lives, stimulating consumption and contributing to promoting sustainable economic growth.

Thank you!

According to the General Statistics Office (Ministry of Finance), GDP growth in the first quarter of 2025 reached 6.93%, which is a positive result in the context of the domestic economic situation facing many challenges. However, to achieve the growth target of 8% or more in 2025, Vietnam needs to achieve GDP growth of 8.3% in the remaining months.

Nguyen Hoa (performed)

Source: https://congthuong.vn/chuyen-gia-kinh-te-adb-hien-ke-thuc-day-tang-truong-gdp-383905.html