Economy strives to achieve 7% growth in 2024

Following the impressive economic growth in the second quarter and the first 6 months of 2024, the Ministry of Planning and Investment has updated the growth scenario for 2024, with the goal of "striving to achieve a growth rate of 7% for the whole year".

First half of 2024: Where does growth come from?

There was a great consensus from Government members and local leaders when discussing the socio-economic situation in the second quarter and the first 6 months of 2024. Accordingly, with GDP growth estimated at 6.93% in the second quarter and 6.42% in the first 6 months, exceeding the upper limit of the scenario set out in Resolution 01/NQ-CP, it is completely possible to affirm the recovery of the economy.

Reporting at the Government Conference with localities last weekend, Minister of Planning and Investment Nguyen Chi Dung also emphasized this. According to the Minister, in the context of the economy facing many difficulties, many localities have made efforts, determination, and had good and creative ways to achieve high growth rates in the first 6 months of the year. For example, Bac Giang achieved a 6-month GRDP growth rate of up to 14.14%, Khanh Hoa was 12.73%, Thanh Hoa was 11.5%, Hai Phong was 10.32%, Hai Duong was 10%...

Rapidly increasing orders are an important factor boosting industrial production and exports in the coming months.

The strong growth of many localities has contributed significantly to the country's GDP growth reaching a fairly high level in the second quarter and the past 6 months. "Growth drivers from the supply side continue to change positively, growth drivers from the demand side recover more positively," said Minister Nguyen Chi Dung.

Accordingly, on the supply side, the agriculture, forestry, fishery and service sectors maintained a good growth momentum; the industry and construction sectors recovered quickly, being the driving force for growth. Specifically, the added value of the industrial sector in the second quarter increased by 8.55%, and the total for the first 6 months increased by 7.54%; of which the processing and manufacturing industry in the second quarter increased by 10.04%, and the total for the first 6 months increased by 8.67%.

Total retail sales of goods and consumer services revenue in the second quarter of 2024 increased by 8.8% over the same period last year, and increased by 8.6% in the first 6 months; international visitors in the first 6 months reached over 8.8 million, up 58.4%. Exports continued to be a bright spot, especially agricultural, forestry and fishery exports. In the first 6 months, total export turnover reached over 190 billion USD, up 14.5% over the same period last year...

Meanwhile, on the demand side, total social investment capital in the second quarter increased by 7.5% over the same period; in 6 months it increased by 6.8%, of which private investment increased by 6.7% - while in the same period in 2023 it only increased by 1.8%. Total registered foreign investment capital in 6 months reached nearly 15.2 billion USD, up 13.1% over the same period, of which newly registered capital reached more than 9.5 billion USD, up 46.9%; realized capital was about 10.8 billion USD, up 8.2%.

Emphasizing macroeconomic indicators, Deputy Minister of Planning and Investment Tran Quoc Phuong, when talking to reporters of Dau Tu Newspaper, affirmed that these are the reasons why GDP growth in the second quarter and the first 6 months of the year was so positive.

In fact, when the statistics on GDP growth in the second quarter and the first half of the year were announced, many people were skeptical about why GDP growth was so high in the current difficult context. However, Deputy Minister Tran Quoc Phuong affirmed that we must "completely trust the statistics".

“The main growth drivers all grew strongly, with both industrial production and exports recovering strongly. Services grew very well, a bright spot in the economy. The agricultural sector also grew, contributing positively to growth,” said Deputy Minister Tran Quoc Phuong.

Of course, according to Deputy Minister Tran Quoc Phuong, in the overall picture of the economy, there are dark spots, such as the retail industry is facing difficulties, the number of businesses withdrawing from the market is still high, the real estate market is also facing difficulties..., but bright colors are still dominant.

Striving for 7% growth

After the positive growth of the second quarter and the first 6 months of the year, the Ministry of Planning and Investment, based on the forecast for the whole year, updated the economic growth scenario for 2024. Accordingly, 2 growth scenarios were proposed.

Specifically, in scenario 1, GDP growth for the whole year reaches 6.5% (the upper limit of the target set by the National Assembly). Accordingly, growth in the third quarter is 6.5%, and in the fourth quarter is 6.6% (the scenarios in Resolution No. 01/NQ-CP are 6.7% and 7.0%).

Scenario 2, GDP growth for the whole year reaches 7%, of which growth in the third quarter is 7.4%, and in the fourth quarter is 7.6%, higher than the scenario in Resolution No. 01/NQ-CP by 0.7 percentage points and 0.6 percentage points.

Offering two scenarios, the Ministry of Planning and Investment recommended choosing the scenario of 6.5-7% growth for the whole year, striving to reach a high level (7%). According to Minister Nguyen Chi Dung, the Ministry of Planning and Investment recommended this based on 6 factors. These are positive growth trends from economic sectors; private investment and state-owned enterprises recovering faster, foreign investment maintaining positive growth momentum; maintaining and accelerating export growth, especially focusing on large markets that are showing signs of slowing down such as China, Japan, etc.

In addition, tourism and consumption are growing faster, striving to achieve and exceed the target of attracting international tourists; new policies and legal regulations are being prepared to be issued and come into effect; the drastic direction and management of the Government and the Prime Minister and the efforts and determination of ministries, branches and localities, especially the leading economic localities.

“If the growth momentum continues to be maintained and accelerated, if these localities grow higher, the growth rate in 2024 is likely to reach, or even exceed, the target set by the National Assembly (6.5%),” Minister Nguyen Chi Dung emphasized.

It is true that there are high expectations for an acceleration in the economy in the last two quarters of the year, so that the whole year can reach and exceed the growth target of 6.5%. The sharp increase in the Purchasing Managers' Index (PMI) could be one of the positive signs. According to S&P Global, Vietnam's PMI increased sharply to 54.7 points in June, compared to 50.3 points in May. This result not only shows that the health of the manufacturing sector has improved for the third consecutive month, but also shows that business conditions have strengthened significantly.

“Vietnam’s manufacturing sector returned to activity mid-year, overcoming the relatively modest growth seen in recent months, supported by a rapid increase in new orders,” said Andrew Harker, chief economist at S&P Global Market Intelligence.

Rapidly increasing orders will be an important factor driving strong growth in industrial production and exports in the coming months, thereby boosting economic growth, as well as the recovery of the business sector.

Meanwhile, although UOB Global Economics and Market Research maintained its forecast that Vietnam’s GDP growth in 2024 would reach 6%, it still emphasized the “strong performance” of both the manufacturing and service sectors. That is the reason why Vietnam’s GDP growth reached a high level in the second quarter and 6 months, far exceeding the 3.84% in the first half of 2023.

“This positive result creates a positive signal for the rest of this year, after a difficult and challenging 2023,” UOB commented.

Focus on growth

Although the current trend of the economy is positive, achieving many important results and this is the foundation to strive to achieve and exceed the growth target of 6.5%, frankly, Minister Nguyen Chi Dung admitted that the difficulties and challenges in the remaining months are very great.

In addition to factors such as macroeconomic stability that still has potential risks, inflationary pressure is still high, while inflation often increases at the end of the year and there are factors that are very difficult to predict, especially fluctuations in world prices, psychology, and expectations of people and businesses, Minister Nguyen Chi Dung said that growth drivers still have many difficulties and challenges, and need to focus on improving and removing them to create a breakthrough for growth throughout the year.

For example, on the supply side, the growth of the agricultural, service and tourism sectors in the past 6 months, although closely following the scenario in Resolution 01/NQ-CP, is facing high production costs and fierce competition. Or the industrial and construction sectors, although being the main drivers of growth and also growing higher than the scenario set out in the 6 months, are heavily dependent on economic recovery and purchasing power in major export markets.

Meanwhile, the growth of the construction industry depends on the recovery of the real estate market, the progress of removing obstacles, and the implementation of investment projects and public investment. “New industries and fields such as digital economy, green economy, AI, chips, semiconductors, etc. have not seen clear changes, and are at risk of not being able to catch up with the world and the region,” Minister Nguyen Chi Dung admitted.

This is worth noting, because in recent directives, the Prime Minister has always emphasized promoting new growth drivers. When these drivers have not had “clear changes”, it is difficult to expect a breakthrough growth of the economy.

Meanwhile, on the demand side, investment recovery is still slow. Domestic purchasing power in the first 6 months increased lower than the same period in 2023 and the period 2015-2019. Export growth is also slowing down.

“In addition to localities with good growth rates, there are 13 localities with 6-month growth below 5%, of which Ba Ria - Vung Tau decreased by 1.42%, Son La increased by 0.67%, Bac Ninh increased by 2.32%, Quang Nam increased by 2.68%…”, Minister Nguyen Chi Dung said and informed that the Ministry of Planning and Investment has worked with 20 associations and surveyed about 30,000 enterprises, and found that the biggest difficulties of enterprises are low market demand, competitive pressure and high production costs. A large number of enterprises are facing financial difficulties, loan interest rates and administrative procedures…

These difficulties will significantly affect the implementation of the 6.5% growth target, even striving to reach 7% this year. Therefore, in the direction of the Prime Minister, to focus on growth, it is necessary to continue promoting exports, stimulating domestic consumption and especially promoting the disbursement of public investment capital... The efforts of localities, especially economic locomotives, are also very important to maintain the recovery momentum of the economy.

“To achieve the growth target of 7.5-8% this year, Ho Chi Minh City's GRDP growth in the third quarter must reach over 7%, and in the fourth quarter it must be even higher,” said Ho Chi Minh City People's Committee Chairman Phan Van Mai, adding that to accelerate in the remaining two quarters, the City will make efforts and find every solution to promote growth.

Source: https://baodautu.vn/kinh-te-nam-2024-phan-dau-dat-muc-tang-truong-7-d219446.html