Mr. Vicente Nguyen, Chief Investment Officer (CIO) of AFC Vietnam Fund, shared with PV. VietNamNet about the economic outlook in 2024, bright spots and difficulties.
The bright spots
- The world and Vietnamese economies have just gone through a year full of fluctuations, unpredictable ups and downs, from production, trade, to consumer investment and cash flow as well as exchange rates. What is your assessment of the Vietnamese economy in 2023?
Mr. Vicente Nguyen: 2023 is an extremely difficult and volatile year worldwide. In the first half of 2023, due to the US Federal Reserve (Fed) and the European Central Bank (ECB) continuously raising interest rates, consumption was squeezed. This negatively affected Vietnam's exports. In the first 6 months of 2023 alone, Vietnam's exports decreased by more than 10% compared to the same period.
The economy bottoms out in the first quarter of 2023 and gradually recovers slightly in the second half of 2023.
We see exports starting to pick up from September 2023. I believe exports will continue to pick up in 2024 and the economy will recover strongly.
- In your opinion, what are the bright spots of the economy and where are the difficulties and problems?
Tourism is the brightest spot in 2023. In the context of gloomy consumption, sluggish exports, and tight investment, tourism increased sharply with more than 11 million visitors, bringing Vietnam more than 11 billion USD.
Thanks to tourism, retail sales still increased despite the difficult domestic situation. In addition to tourism, foreign direct investment (FDI) is also a bright spot as capital flows into Vietnam continue to remain high and grow steadily.
- As an investment fund manager, in your opinion, were the fiscal and monetary policies in the past year appropriate to the health of the Vietnamese economy and the volatile world economic context?
It can be said that in the midst of difficulties, the Government has implemented extremely effective and flexible policies. That is my own conclusion. If we had not responded promptly to these changes, the economy would have been much, much worse. Specifically, the outstanding policies that saved a difficult year are:
Interest rate cuts support consumption and investment. After deposit interest rates peaked in December 2022, the State Bank has continuously cut interest rates to stimulate the economy. Up to now, deposit interest rates have dropped to a record low. Some banks have lowered interest rates below 2%/year. This has helped many businesses escape difficulties.
In addition, there are tax and fee cuts. Tax and fee cuts have helped the economy cope with difficulties.
In particular, public investment has increased by more than 20% compared to the same period last year, although it is still much lower than expected. We need to drastically increase disbursement in the coming years to stimulate the economy.
- What causes credit growth and public investment to remain slow, the real estate market to remain sluggish for a long time, and not reach targets despite sharp interest rate reductions?
There are many reasons for the slow growth of the above factors. Credit is mainly due to a sharp decline in consumer and investment demand, in which demand for real estate has decreased significantly, this sector alone has made it difficult for real estate credit (accounting for 21%) to increase strongly.
As for public investment, there are still many procedures and mechanisms that are still stuck, leading to slow disbursement. As for real estate, I personally think it will take many years to grow again, so even if interest rates decrease, it will be difficult to stimulate it again.
"It will definitely be better"
- Recently, there have been many forecasts that Vietnam is the center of economic growth in the Asian region with many foundations such as high economic openness, stable macro economy, geostrategic location, many free trade agreements FTAs, especially upgraded relations with major partners such as the US, Japan... How do you assess the economic prospects of Vietnam in 2024 and the coming years? Prospects for FDI and FII capital flows into Vietnam in the new year?
In 2024, I am sure that the economy will be better than 2023, GDP can reach 5.5-6%. However, there are still many difficulties, especially difficulties in the real estate sector that block cash flow in the economy. FDI capital will continue to reach high and stable levels. Meanwhile, indirect investment capital (FII) fluctuates unpredictably.
- In your opinion, what is the main driving force of the Vietnamese economy in 2024? Where are the brightest spots and biggest obstacles of the Vietnamese economy in the new year?
Vietnam's economic growth momentum in 2024 will continue to be the improvement of industry as exports recover and growth returns to positive levels. This will be followed by the recovery of public investment, tourism and domestic consumption. The bright spots of Vietnam's economy will still be tourism, FDI and public investment. The biggest obstacle is still real estate.
- What is your forecast for the stock market in 2024?
The stock market will continue to have many big fluctuations, strong fluctuations but in spirit it will still increase compared to 2023.
- Forecast of the world economy, major countries and impact on Vietnam's economy?
The Fed and ECB are expected to cut interest rates in 2024 and 2025. This will greatly support the Vietnamese economy.
Thank you!
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