The Government's report said that GDP growth in the second quarter of 2024 recovered strongly, reaching 6.93%. The total for the first 6 months reached 6.42%, much higher than the same period in 2023 (3.84%). Notably, exports continued to increase strongly, increasing by 14.5% in the first 6 months (domestic sector increased by 20.6%; FDI sector increased by 13.9%); imports increased by 17%; trade surplus was 11.63 billion USD.
Outlook and 2 growth scenarios
Based on the reality of the first 6 months of the Vietnamese economy, many international organizations and experts continue to highly appreciate the results and prospects of the Vietnamese economy. Many financial institutions such as ADB, Standard Chartered, HSBC, IMF... forecast Vietnam's GDP growth in 2024 to be over 6%.
According to Deputy Minister of Planning and Investment Tran Quoc Phuong, the GDP growth results in the second quarter and the first 6 months of 2024 were very positive, especially in the second quarter. Mr. Phuong considered this a breakthrough growth, opening up expectations for better growth at the end of 2024.
For the remaining 6 months of 2024, the Ministry of Planning and Investment has proposed 2 growth scenarios. First (baseline scenario): Full-year growth reaches 6.5%. According to the Ministry of Planning and Investment, this is a completely feasible target. Second (high scenario): Full-year growth is expected to reach 7% (Q3 increases by 7.4%, Q4 increases by 7.6%).
According to the Ministry of Planning and Investment, although over 7% is a high level, we are completely capable of striving for it in the context of our efforts to overcome the limitations. "We report to the Government to choose a new scenario, with annual growth of about 6.5-7%. In particular, the Ministry of Planning and Investment recommends that the Government strive to achieve a target higher than 7% in order to have more drastic directions towards this goal" - Deputy Minister Tran Quoc Phuong said.
Along with that, Mr. Phuong explained 6 factors that will create a positive impact on economic growth in the last months of 2024.
These are: (1) Positive growth trends in the region and the world. (2) Investment motivation, including investment from the non-state sector, especially FDI, has grown positively. (3) Export motivation has recovered and the rate of enterprises with export orders has increased. (4) Tourism has recovered quite strongly, with both domestic and international visitors increasing. (5) The National Assembly has approved the effectiveness of three very important laws, namely the Land Law, the Real Estate Law and the Housing Business Law (effective from August 1).
These three laws will have a huge impact on the real estate market, which has been facing many difficulties in the first 6 months of the year. With new, more open and favorable regulations, the real estate market will show signs of improvement in the last 6 months of the year, positively impacting economic growth. (6) The Government's direction and management is very drastic; requiring ministries, branches, and localities, especially the 4 localities that are the growth engines of the economy, to be more drastic in promoting growth targets.
GDP growth from an expert perspective
From an expert perspective, many opinions have also given forecasts for Vietnam's GDP growth in the last 6 months of the year. According to Associate Professor, Dr. Dinh Trong Thinh (Academy of Finance), many signs show that GDP growth in the last 6 months of the year may be higher than the set target. "I think the economy at the end of the year may have a higher growth rate in the range of 6.8-7.3%" - Mr. Thinh said and emphasized that businesses have had a relatively good recovery process and have achieved positive results.
Since July 1, the Government has also reduced more than 36 fees and charges with a total fee reduction of about 700 billion VND. From these advantages, businesses will recover and stabilize production and business thanks to conditions to restructure production organization, reduce raw material costs, and increase labor productivity.
Dr. Nguyen Quoc Viet (Deputy Director of the Vietnam Institute for Economic and Policy Research - VEPR) forecasts that growth in the last 6 months of the year will be better than the same period last year.
However, according to Mr. Viet, the target growth of 6.5% is unlikely to be achieved this year due to a contraction in the public sector; weak domestic and foreign consumer demand, affecting private sector spending and export growth; and rising exchange rates in the second half of the year are likely to boost inflation risks and reduce private sector investment incentives.
Mr. Viet also gave two GDP growth scenarios in 2024. In the first scenario, GDP growth is at 5.85%; inflation is at 4.5%, the average annual VND exchange rate depreciates at 5-6%. In the second scenario, GDP growth is at 6.01%; inflation is at 5%.
Thus, although there are different opinions and different forecasts, the "common denominator" is still that Vietnam's GDP growth in 2024 is quite good, especially with effective inflation control.
Tight control of inflation in the new context
Earlier this year, speaking at the workshop “Market and price developments in Vietnam in 2023 and forecast for 2024”, organized by the Institute of Finance and Economics (Academy of Finance) in coordination with the Department of Price Management (Ministry of Finance); many opinions said that in 2024, despite many difficulties, inflation will be relatively “easy to breathe”. According to Dr. Nguyen Duc Do (Deputy Director of the Institute of Finance and Economics), inflation in 2024 will be around 3%.
At this point, according to the General Statistics Office, in the first 6 months of 2024, the CPI (consumer price index) increased by 4.08% over the same period last year. Core inflation increased by 2.75%. Notably, the price of goods is about to increase in the context of increasing the basic salary (from July 1), causing many opinions to worry about the ability to control inflation throughout 2024.
According to Associate Professor Dr. Vu Duy Nguyen (Director of the Institute of Economics and Finance), the average CPI is around 3.95% assuming the GDP growth target is 6-6.5% and there are no unusual fluctuations in geopolitics and world oil prices.
High GDP growth is ideal, but if inflation also increases, it will lose much of its meaning. To control inflation in the remaining months of the year, Ms. Nguyen Thu Oanh (Director of the Price Statistics Department, General Statistics Office) said that it is necessary to proactively monitor closely the economic developments and prices of strategic goods in the world market; at the same time, ensure smooth supply, circulation and distribution of goods and services, especially for gasoline and strategic goods that are likely to be affected by the disruption of the global supply chain.
From July 1, the new salary increase regime will be applied. According to Ms. Oanh, for goods and services managed by the State, the increase should not be adjusted at the same time. And it should not be concentrated at the end of the year when consumer demand is high because when the consumer price index continuously increases, it will create inflation.
The general opinion of financial experts is that, even though a large amount of money is "pumped" out from salary increases, the CPI in the last 6 months of the year is still at an acceptable level, meaning there is no possibility of inflation.
According to Dr. Tran Toan Thang (Ministry of Planning and Investment), with about 4 million workers in the public sector, the increase cannot change the structure of many consumption structures of some goods. The factors causing fluctuations in the inflation index in the first 6 months of the year from pork prices and food prices only had a short-term impact and did not create a new price level. "On the other hand, with the goal of promoting growth, an inflation index of about 4% is not too worrying" - according to Mr. Thang.
Source: https://daidoanket.vn/kiem-soat-lam-phat-de-giu-da-tang-truong-10285321.html
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