Economic growth in 2024 will be very positive

Vietnam's 2024 economic growth target is completely achievable and the medium-term growth outlook remains promising, but there is still much to do to realize the outlook, Ms. Michele Wee, General Director of Standard Chartered Vietnam shared her views in an interview with the Banking Times reporter.

Please tell us your perspective on the monetary policy management of the State Bank in 2023?

I think that the SBV has managed very well in the past year. Looking at the inflation trend, we see that inflation is very well controlled and this would be difficult to achieve without the SBV's active management. Along with that is the orientation to reduce interest rates. Through the cuts in policy interest rates, the SBV has created room and encouraged access to credit and the result is that credit growth of the whole system reached about 13.5%.

Ms. Michele Wee, General Director of Standard Chartered Vietnam

The SBV also encourages dialogue and working activities between banks and the business community through conferences and seminars; at the same time, providing instructions and guidance to banks in cutting lending procedures are also moves that we welcome. If we look at the exchange rate between VND and USD, we see stability and show the efforts in management and operation of the SBV, especially in the context of complex global fluctuations in the past year.

And another point I want to emphasize is that the State Bank focuses on digital transformation and green transformation in the banking sector, because this is both in line with the current general trend and is an important factor in helping the banking sector operate and function more effectively.

With interest rates as low as they are now and likely to stabilize in 2024, how do you view the prospects for credit growth?

As we have seen, access to credit has been very favorable in 2023 and with quite positive credit growth in the past year. Therefore, I imagine that maintaining a stable interest rate environment like the current one will boost confidence for the business community and banks will continue to have enough capacity to provide credit. This will help credit growth to be more positive this year, thereby supporting higher economic growth.

However, this expectation must also be linked to other macroeconomic factors, especially inflation. For example, the hope that there will not be sharp increases in the consumer price index (CPI) that would require monetary policy adjustments to control inflation.

According to you, what needs to be done to achieve the economic growth target this year and the following years?

The main drivers of Vietnam's economic growth have all recovered in recent times, especially if we look at the second half of 2023. Therefore, in 2024, we believe that the growth target set will be completely achievable. For example, recently, Standard Chartered's Global Research Department published a report, in which it forecasts Vietnam's GDP growth to reach 6.7% this year. The medium-term growth outlook is also very promising.

But clearly, there is still much to do to realize the prospect, from continuing to focus on investing in infrastructure development to continuing to reform administrative procedures, improving the business environment, further improving the investment environment... I see that such work has been discussed and many of its contents are being actively implemented. Therefore, I expect that Vietnam's legal, regulatory and governance framework will increasingly approach the global level, be transparent, easy to understand and easy to comply with for everyone.

Manufacturing industry is one of the important drivers of growth.

Vietnam is a country that has attracted a lot of FDI capital and certainly wants to continue to attract more in the future. In particular, the Vietnamese Government's commitment to the Net Zero target and setting a roadmap to achieve it is an extremely important factor. Because this is both consistent with Vietnam's long-term sustainable development goals and supports better exports.

We all know that during this time and in the future, exporting to large developed markets will become increasingly difficult as their regulations and requirements become increasingly strict, requiring production and export activities to be oriented towards green and sustainable factors.

In addition, the commitment and roadmap to implement the Net Zero goal also help Vietnam attract quality FDI capital flows into Vietnam as desired. We have talked and heard a lot about the need for Vietnam to participate deeply, at higher levels, with greater added value in global manufacturing supply chains, and the recent heated discussions on the semiconductor industry are an example. Along with that, how to attract more investment in areas such as energy transition, investment in improving infrastructure to reduce logistics costs, or attracting investment in the education and pharmaceutical sectors, etc. are also very necessary for sustainable growth in the future.

Thank you!

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