Identifying growth drivers, ensuring GDP target 2024

Vietnam's GDP growth in the third quarter and the whole year of 2024 is forecast to remain at 6.5%, even though the economy is more or less affected by storm No. 3.

The world and domestic macro economy has many positive factors to create momentum for the completion of this year's growth target. Although Vietnam's economy has just suffered a significant impact with the losses that storm number 3 caused, but the business community and analysts are still optimistic about the overall picture with bright colors. More than that, the drastic participation of the Government, ministries and branches and the efforts of enterprises are important factors to contribute to ensuring the set goals.

Export turnover Maintaining high growth momentum, positive manufacturing Purchasing Managers' Index (PMI), focused public investment disbursement and accelerated implementation of recovery support programs after storm No. 3 are the driving forces to maintain growth.

Analysts from VNDirect Securities Corporation in their macro update analysis report with the theme “Promoting the economy after the storm is the top priority” also had very positive perspectives. Accordingly, despite the damage caused by the storm, the experts still maintained their forecast. GDP growth for Q3/2024 is 6.4 - 6.8% and for the whole year 2024 is 6.5%.

These forecasts are primarily based on the growth of the first 8 months of the year. Specifically, import-export activities exceeded the forecast with export-import turnover increasing by 15.9% and import increasing by 18.1% in the first 8 months of 2024, which is a very positive result. In addition, the PMI index of Vietnam's manufacturing industry reached 52.4 points with 3 highlights: Output and the number of new orders continued to increase significantly; inflationary pressure eased and employment decreased for the first time in the last three months.., which is a good sign for ensuring this year's growth target.

Experts still maintain their forecast of GDP growth for the whole year of 2024 at 6.5%. Photo: Ngoc Hieu

From the developments in production and export, Mr. Do Quang Hinh - Head of Macro and Market Strategy Department of VNDirect - commented: We maintain a positive assessment of export prospects in the last months of this year.

We therefore raise our forecast for export growth this year to +15.2% yoy, up from our previous forecast of 10-12% yoy; and our forecast for import growth this year to +17.2% yoy, up from our previous forecast of 13-15%. “ Exceeding forecasts for import-export activities are expected to partly offset the economic slowdown caused by the storm.” - Mr. Hinh emphasized.

Along with positive signals of production, import and export, the thorough participation of the Government and ministries is also an important factor to expect this year's growth target to be ensured as planned. Specifically, the Government's support program for people and businesses suffering damage and economic recovery is being widely implemented by focusing on restoring essential infrastructure such as power grids, roads, schools and clinics, while supporting people to repair and rebuild houses damaged by storm No. 3. The Government has assigned State Bank Plan and implement policies such as debt extension, deferral, debt forgiveness, credit policy, zero interest rate package; Ministry of Finance studies reduction, extension, postponement of taxes, fees and charges; Ministry of Industry and Trade ensures supply of input materials for production and business.

In addition, to boost growth, the Government will further accelerate disbursement of public investment and national target programs.

Speaking to reporters from the Industry and Trade Newspaper, economic expert - Dr. Tran Dinh Thien commented: Increasing public investment disbursement for the infrastructure sector will spread widely throughout the economy, "permeating" into small and medium enterprises. This will create a driving force to stimulate consumption and production, helping economic growth.

Another positive signal for the economy is the gradual easing of the global credit environment: Major central banks have been accelerating their interest rate cutting cycle; the US Federal Reserve (Fed) started cutting policy rates from its September meeting and will cut a total of 75-100 basis points between now and the end of the year. This has had a positive impact on the domestic money market. In fact, credit demand continues to increase and credit has recovered significantly since mid-August, causing deposit interest rates to maintain a moderate upward momentum.

According to Mr. Do Quang Hinh, the State Bank has adjusted monetary policy towards supporting system liquidity in the context of a stable foreign exchange market, starting from the second half of August. Specifically, the temporary suspension of the issuance of treasury bills shows a shift in priority to supporting liquidity and the direction of cooling down interbank interest rates. At the same time, the State Bank continues to cut treasury bill and interbank market (OMO) interest rates. Thanks to that, “The interbank interest rate has cooled down significantly with the overnight interest rate falling below 4.0%, showing that the State Bank's intervention has been effective. At the same time, the net balance through OMO activities has turned into a net injection status, marking a reversal from the net withdrawal trend since early June 2024.” - Mr. Hinh cited.

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