Two economic growth scenarios for 2023

January 13, 2023 - 08:00
The CIEM’s report "Việt Nam’s economy in 2022 and prospects for 2023" offers two scenarios for Vietnamese economic growth this year.


A corner of HCM City. Government goals of achieving economic growth of 6.5 per cent and inflation at 4.5 per cent would be a challenge if the management was not flexible enough. — VNA/VNS Photo Ngọc Hà

 HÀ NỘI — The Central Institute for Economic Management (CIEM) and the Ministry of Planning and Investment, in collaboration with the the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) held a seminar on Việt Nam’s economy in 2022 and prospects for 2023.

CIEM’s report "Việt Nam’s economy in 2022 and prospects for 2023" offers two scenarios for Vietnamese economic growth this year.

Accordingly, in the first, GDP of Việt Nam increases by 6.47 per cent with average inflation at 4.08 per cent, export growth hits 7.21 per cent and the trade balance reaches $5.64 billion.

The second is more positive when labour productivity grows, GDP growth reaches 6.83 per cent; inflation 3.69 per cent; export growth 8.43 per cent and trade balance $8.15 billion.

Speaking at the conference, Trần Thị Hồng Minh, Director of CIEM, said last year was considered to be an extremely difficult and challenging year for the Vietnamese economy and the global economy in general.

In addition to the increase in the prices of commodities such as energy and food, leading to an increase in inflation in many countries, the pandemic developments, the Russia-Ukraine conflict, along with embargo measures of the many economies heavily affected the recovery of the supply chain.

The difficult context requires Việt Nam to constantly monitor and update assessments and recommendations in order to maintain macroeconomic stability, control inflation, and create a favourable environment for socio-economic reform, recovery and development.

With those efforts, Việt Nam's economic picture achieved positive results last year, GDP growth reached 8.02 per cent, the highest in the period from 2011 to 2022, far exceeding the target of 6.5 per cent proposed by the National Assembly.

Inflation control reached 3.15 per cent, reaching the target below 4 per cent, and the macro economy was maintained, said Minh.

Nguyễn Anh Dương, Head of the General Research Department, CIEM, said that Việt Nam's economic growth reached impressive results last year. Besides GDP growth of 8.02 per cent, foreign investment attraction and import-export activities were also evaluated positively.

However, the growth rate was showing signs of slowing down from the fourth quarter of last year, he said.

The problem of lack of orders, leading to underemployment, occurred at many enterprises.

This impact might not only stop at the fourth quarter but could also last until the first months of 2023, he said.

The assessment of the CIEM research team in the report also shows that, compared to previous years, Việt Nam's economic outlook this year might be influenced by more factors than last year.

In particular, these include the ability to control the spread of virus variants and new diseases, thereby facilitating economic activity; and the degree of monetary tightening in key economies to handle inflationary pressures.

Key economies will increase geopolitical competition, the Russia-Ukraine conflict may linger, but "like-minded" economic groups may increase cooperation in many areas.

Along with that, these factors also include the progress of implementing the programme of socio-economic recovery and development.

If macroeconomic stability is maintained, Việt Nam can continue to reform and promote fiscal and monetary measures to help restore economic growth.

Finally, economic growth will depend significantly on the ability to diversify export markets, take advantage of opportunities from free trade agreements (FTAs) and handle risks associated with trade–technology confrontation among superpowers, the downtrend of regional currencies against the US dollars.

The report by CIEM also re-emphasises the message that policy priorities need to continue to focus on improving the microeconomic foundation and reforming the economic institutional system in a direction that is more friendly to innovation and the environment, associated with effectively handling risks in the volatile international economic environment. — VNS