Economic Committee: GDP this year will only increase by over 5%

The growth drivers of the economy are slowing down, even declining, and are under great pressure from the outside. The Economic Committee believes that GDP in 2023 will only increase by over 5%.

This comment was made by Mr. Vu Hong Thanh, Chairman of the Economic Committee, when examining the Government's report on socio-economic development in 2023 and the 2024 plan.

Chairman Vu Hong Thanh said that this year's socio-economic situation continues to show a positive recovery trend, with 10 out of 15 targets assigned by the National Assembly reaching or exceeding targets. However, 5 targets will not be met, including labor productivity failing to reach its target for the third consecutive year. At the same time, this year's growth target has decreased significantly, with the GDP for the whole year estimated to increase by over 5%. This level is lower than the 6.5% target assigned by the National Assembly and the 6% target that Prime Minister Pham Minh Chinh stated at the regular meeting of the Government in September.

"The main growth drivers of the economy are slowing down, even declining, and are under great pressure from the outside," the Chairman of the Economic Committee commented.

Mr. Vu Hong Thanh, Chairman of the Economic Committee, spoke at the discussion session of the National Assembly Standing Committee on socio-economic issues on October 16. Photo: Hoang Phong

Previously, at the Government meeting at the end of September, the Ministry of Planning and Investment said that this year's growth would hardly exceed 6%. This agency forecast three growth scenarios for 2023. In the lowest scenario, this year's economic growth is about 5%, then the last quarter of the year needs to increase by 7%. In the average scenario, GDP for the whole year increases by 5.5%, and the fourth quarter must increase by 8.8%.

The most optimistic growth rate forecast by the Ministry of Planning and Investment is around 6%, but to achieve this level, GDP in the fourth quarter must increase by 10.6%. This is a very challenging figure when GDP in the third quarter only increased by 5.33%. That is, to achieve 6% growth for the whole year, the last quarter must have an increase rate nearly double that of the previous quarter.

Also according to the Economic Committee, exports - the driving force of economic growth, are forecast to decrease this year. According to the General Statistics Office, goods exports in the first 9 months decreased by 8.2% over the same period; private investment increased by 2.3%, only about 1/6 of the increase before the pandemic. The processing and manufacturing industry slowed down sharply when the IIP index of the industry in the first quarter decreased by 2.9%, in the second quarter decreased by 0.7%, and in the first 9 months increased by a very low 0.2%.

Mr. Thanh mentioned cumbersome and complicated administrative procedures, many inappropriate standards and technical regulations causing difficulties for businesses and people. On the other hand, businesses also face difficulties in the market, cash flow, infrastructure that does not meet requirements, high production and logistics costs. This reality leads to an increase in the number of dissolved and bankrupt units in 9 months, more than 135,000 businesses. Meanwhile, newly established businesses decreased by 14.6% in terms of registration and 1.2% in terms of number of employees. The situation of businesses lacking orders is common.

The Economic Committee also noted that the actual disbursement of public investment capital improved but was not as expected, reaching nearly 51.4% by the end of September. There were 17 ministries and central agencies that disbursed less than 10%.

Despite forecasting many existing difficulties, the Economic Committee believes that economic growth will recover in 2024-2025. However, achieving the average growth target of 6.5-7% in the 2021-2025 period is an extremely difficult task, according to the Standing Committee of the Economic Committee.

The auditing agency believes that some indicators such as GDP per capita, the proportion of processing and manufacturing industry, or the average growth rate of social labor productivity... will be very difficult to complete without breakthrough solutions.

In 2024, the Government set a GDP growth target of 6-6.5% and per capita income of about 4,700-4,730 USD. However, during the review, the Economic Committee suggested that the Government assess the feasibility of this growth target and consider building a more aggressive budget revenue estimate to increase development investment spending and reduce the budget deficit.

The Economic Committee recommends that the Government accelerate investment in the transport infrastructure system, remove obstacles for markets such as corporate bonds, real estate, and securities, and extend tax, fee, and charge support policies to promote production and business, and restore the economy more sustainably.

Mr. Minh

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