Ho Chi Minh City's economic growth target of about 8% in 2024 can be achieved if it knows how to promote consumption, expand export markets and the world situation recovers.
The above assessment is stated in the "Macroeconomic Report: Results 2023 and Forecast 2024" recently announced by Ho Chi Minh City University of Economics (UEH) and the city's Department of Statistics.
In 2023, Ho Chi Minh City's GRDP will increase by 5.8%, 1.7-2 percentage points lower than the target. Last month, the city set a growth expectation of 7.5-8% this year. To make this target feasible, according to experts from Ho Chi Minh City University of Economics, "the world economic situation needs to recover smoothly, combined with the city's synchronous implementation of solutions to boost aggregate demand."
The research team believes that a detailed look at quarterly data in 2023 shows a steady recovery of the Ho Chi Minh City economy. The recovery of aggregate demand is clearly reflected through many indicators of consumption, investment and export.
But considering the world situation, most major research organizations currently agree that the global economy will recover slowly in 2024, with little chance of a breakthrough. Many reasons have been pointed out, including the high risk of congestion or disruption of supply chains due to political conflicts. The probability that central banks in the US and Europe will start cutting interest rates in 2024, especially in the first half of the year, is quite low.
Both the US and Europe - the city's two major trading partners - are forecast to grow at a modest pace this year. Meanwhile, China's growth is likely to slow down. Therefore, Ho Chi Minh City's exports will find it difficult to break through and pose a challenge to recovering aggregate demand, according to UEH.
Aggregate demand is the total value of all goods and services produced and consumed by an economy in a given period of time. To stimulate demand, the research team recommends that Ho Chi Minh City adopt policies to promote consumer spending, investment in corporate and household assets, and exports.
In particular, the city needs to diversify its markets, expanding to potential countries such as Japan, South Korea and India. For example, India is growing strongly and steadily, but the proportion of export turnover to this market last year was only 1.41%.
According to UEH, these measures combined with accelerating public investment disbursement, efforts to overcome bad debt and improve the liquidity of the banking system to unblock credit flow, the recovery of aggregate demand in Ho Chi Minh City is expected to have great support in the last six months of the year.
In the immediate future, according to the survey of the Ho Chi Minh City Statistics Office on the business situation in the first quarter, 21.9% of enterprises assessed it as better, 43.5% as stable and 34.6% as more difficult. Of which, 66.7% of state-owned enterprises had a positive view. This rate in the private and foreign enterprises was 65.3% and 65.2% respectively.
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