Strengthening growth momentum for 2024

The government needs to consolidate existing growth drivers such as exports, investment, and consumption through proactive responses. Photo: Thu Hien

Creating adequate space for the new growth momentum

The National Assembly has passed a resolution on the Economic and Social Development Plan for 2024. It sets the goal for 2024 to continue prioritizing growth while consolidating and maintaining macroeconomic stability, controlling inflation, and ensuring the major balances of the economy. Simultaneously, it aims to push for more positive transformations in strategic breakthroughs, restructuring the economy in association with innovating the growth model, enhancing productivity, quality, efficiency, competitiveness, and the self-sufficiency capacity of the economy. Notably, the National Assembly has agreed on the target GDP growth rate of 6-6.5%; the per capita GDP reaching around US$4,700-4,730; and the average consumer price index (CPI) growth rate at 4-4.5%.

Assessing the growth target for 2024, Vu Hong Thanh, Chairman of the National Assembly's Economic Committee, stated that there were opinions suggesting that, given the current context, setting a growth target of around 6-6.5% is relatively high and should be set lower, around 5-6%. Regarding this matter, the Standing Committee of the National Assembly explained that the GDP growth target was developed based on the analysis and forecasting of the domestic and international situation, taking into account the favorable and challenging factors of 2024, closely aligning with the orientation, goals, and tasks of the 5-year economic and social development plan.

According to many economic experts, this is an ambitious target with numerous challenges, but it can be achieved by implementing a comprehensive set of solutions to activate and renew growth drivers. Speaking to the CustomsNews, Dr. Can Van Luc, Chief Economist of BIDV Bank, stated that in the coming time, opportunities and challenges would be intertwined as the world and regional situations undergo rapid, complex, and unpredictable changes. The GDP growth target of 6-6.5% in 2024 poses many challenges, but if the economy can leverage existing growth drivers and effectively explore and exploit new growth drivers, the set growth target is feasible.

According to Luc, to regain rapid and sustainable development, the National Assembly and the Government need to implement many policies and solutions to ensure macroeconomic stability, enhance resilience, consolidate traditional growth drivers, and create sufficient space to effectively exploit new growth models and drivers. In this regard, the government needs to strengthen existing growth drivers such as exports, investment, and consumption through proactive scenarios to respond appropriately, thereby ensuring stability and health in stock markets, corporate bonds, real estate, petroleum, and bank liquidity. Furthermore, stimulating domestic consumption demand and promoting the recovery and growth of economic spearheads, especially in Hanoi and Ho Chi Minh City, should be emphasized to boost regional linkages. Ministries, sectors, and localities need to vigorously implement the recovery program, accelerate the disbursement of public investment, especially for key projects with high spillover effects and infrastructure investment. Monetary policies, fiscal policies, and macro policies must be coordinated and organized effectively to continue reducing interest rates, stabilize exchange rates, commodity prices, and financial markets, and build resilience in the face of potential risks.

"For new growth drivers (including digital transformation, regional linkage, and promoting the two key drivers of Hanoi and Ho Chi Minh City), the process of perfecting institutions needs to be accelerated, especially laws related to land, housing, real estate business, and bidding, including removing barriers, focusing on enforcement, and policy coordination; attention should be given to building institutions for the development of the digital economy, green economy, and circular economy. Building and implementing mechanisms and policies to mobilize financial resources for circular economy development associated with green economy is an important requirement in the coming time," emphasized Luc.

Expectations for strong export recovery

According to Dr. Nguyen Quoc Viet, Deputy Head of the Institute for Economics and Policy Research (VEPR), in general, the economy will face many "headwinds" in 2024. The conditions for achieving the goals in 2024 rely on the government's continued support for economic growth, and localities maintaining their efforts. Specifically, it is essential to boost public investment, support interest rates to help businesses recover, and continue stimulating exports.

However, according to Viet, there are issues that need to be clearly identified and solutions to promote the strength of the domestic economy in the near future. This includes the significant growth in Foreign Direct Investment (FDI) capital, but the low growth of domestic private investment indicates problems with the resilience and adaptability of the private sector. In this context, exports are a bright spot with a trade surplus, but Vietnam's exports depend heavily on the FDI sector, and the exports from this sector are showing signs of decline. This indicates that the autonomy of the economy in general and Vietnamese private enterprises, in particular, is still challenging. Industrial production and exports have not shown signs of early recovery; a more positive transformation may be expected by 2024. In the challenging context of export difficulties and slow domestic consumption breakthroughs, boosting public investment will be a crucial contribution to the growth target in 2024.

Sharing insights into the economic growth drivers in 2024, the Deputy Head of VEPR expected a strong recovery in exports as positive export signals appeared in the fourth quarter of 2023. Additionally, there is a need to continue stimulating domestic consumption by maintaining a 2% reduction in value-added tax (VAT). Another factor is the delayed disbursement of public investment this year, which will be activated to drive economic growth next year.

Assessing the growth drivers for the coming year, economic expert Vo Tri Thanh believed that import-export might be better next year but still at a low level. Domestically, the momentum from consumption is trending downward, especially domestic consumption, so attracting foreign tourists is crucial. This momentum plays a pivotal role in current economic growth, with public investment remaining the backbone. To leverage this growth pillar, it is necessary to strongly disburse public investment, especially extending recovery and development programs. Along with this, monetary policy has almost exhausted its capacity, and fiscal policy will play a crucial role in this phase to overcome these "headwinds." Therefore, some inappropriate fiscal packages need to be converted into those with better disbursement potential.