Trần Thị Hồng Minh, director of the Central Institute for Economic Management under the Ministry of Finance, Planning, and Investment. Photo doanhnhan.vn

The growth rate of Việt Nam's economy in the first six months of the year was the lowest recorded between 2011 and 2023, surpassing only the figures from 2020, which was significantly impacted by the COVID-19 pandemic.

To gain a clearer perspective on the likelihood of achieving the economic growth target for 2023, Việt Nam News Agency had an interview with Trần Thị Hồng Minh, director of the Central Institute for Economic Management under the Ministry of Planning and Investment.

What is the primary reason economic growth in the first six months of the year may not meet the initial expectations?

The first half of 2023 presented a challenging period not only for the Vietnamese economy but also for the global economy as a whole. Nevertheless, Viet Nam's economy still managed to achieve encouraging results, with the second quarter exhibiting more growth than the first. Notably, some sectors, such as agriculture, saw robust growth of over 3 per cent.

However, it is evident that the 6-month growth has not met the expected levels and remains relatively low compared to the past decade. This can be attributed to difficulties and challenges both on internal and external fronts. On the international aspect, the protracted Russia-Ukraine conflict has created disruptions in the global supply chain, leading to decreased import demand from major markets that Việt Nam relies on. Consequently, businesses across various industries have experienced reduced orders, impacting export performance.

Domestically, despite the government's dedicated efforts to establish a robust legal framework and a favourable business investment environment, there still exist certain inconsistencies and overlaps in the legal regulations that pose challenges for businesses and investors. Cumbersome administrative procedures persist in the business investment environment, hindering effective connections to relevant databases related to administration, taxation, and business information. Streamlining these processes is essential to enhance the effectiveness of state management agencies and facilitate businesses and citizens alike.

Over the recent period, the State Bank has consistently decreased interest rates, aiming to foster a favourable business environment and provide businesses with more affordable capital. However, despite these efforts, businesses still face significant challenges in accessing these lowered interest rates, hindering their ability to adapt to market fluctuations. This issue can be attributed to factors on both the banks' side and the businesses' side.

On the banks' side, the implementation of the 2 per cent interest rate support programmes for businesses has not been as effective as desired due to certain difficulties related to the preferential conditions of the corporate interest rate support programme. As a result, banks may encounter challenges in extending these favourable rates to businesses.

On the other hand, businesses themselves may face financial difficulties or have been adversely affected by the prolonged COVID-19 pandemic, which prevents them from meeting the necessary conditions to access loan packages and avail themselves of the lower interest rates.

To address this issue, it is crucial to bolster businesses by creating an environment that supports their recovery and enables them to overcome existing difficulties. By doing so, businesses can access the lowered interest rates more efficiently. Additionally, a review of the loan conditions linked to the 2 per cent interest rate support programme is necessary to simplify the process and facilitate businesses' access to these beneficial rates. Through these measures, businesses can be better equipped to navigate market fluctuations and foster economic growth.

Analysts have positive expectations regarding the rebound of the domestic market, particularly with the projected rapid recovery of the tourism and service industries. What is your perspective on this?

In the first half of the year, the National Assembly and the Government have implemented various supportive policies for the domestic market, as well as the service and tourism sectors. For instance, the Government proposed a policy to reduce VAT by 2 per cent for select items, positively impacting people's purchasing power by lowering prices.

Furthermore, the National Assembly approved the amendment to the Law on the exit and entry of Vietnamese citizens and the Law on entry, exit, transit, and residence of foreigners in Việt Nam. This regulatory change is expected to serve as a significant driving force for the tourism industry in the near future.

In the remaining six months of the year, there is great potential for further growth in the tourism and service industries. These sectors have the capacity to increase domestic consumption and spur production, making the latter half of the year an opportune time to leverage policy advantages and stimulate the tourism service industry. The performance of the service sector will significantly impact economic growth in the third and fourth quarters, contributing to overall economic performance in 2023.

Additionally, I believe that boosting exports will remain a crucial factor in promoting growth. Regulatory bodies must create the most conducive conditions for businesses to deepen their market penetration in countries such as the US, EU, and Japan. Conducting a thorough review of the conditions and contents of existing free trade agreements will facilitate a boost in exports and help achieve the export target for 2023.

What are the main solutions to promote economic recovery and development in 2023, in line with the set goals?

First and foremost, it is crucial to maintain and adhere to policies that stabilise the macro-economy, control inflation, and ensure a balanced economic outlook. This has been a significant focus, and we have made progress in the first half of the year.

Additionally, we must continue to reform the economic recovery programme's objectives and contents. A key aspect is improving institutions, eliminating overlaps, and resolving conflicts in legal regulations to enable ministries, sectors, and localities to implement measures more effectively. Enhancing the business investment environment is also essential, creating an enabling environment for both domestic and foreign enterprises to register and conduct business in Việt Nam efficiently.

Moreover, the establishment of an efficient database to connect essential information, supporting government administration, inter-ministerial cooperation, and local coordination will better serve the needs of people and businesses.

Based on the estimation of economic indicators in the first 6 months of the year, how do you forecast the possibility of achieving the economic growth target set by the National Assembly's Resolution?

Typically, economic growth in the first and second quarters tends to be relatively lower, but we can anticipate an acceleration in the third and fourth quarters, and 2023 is likely to follow this pattern. The supportive policies implemented from the beginning of the year will take effect in the last 6 months, contributing to this trend.

Furthermore, we must acknowledge the active management of the Government and various sectors at all levels, alongside the efforts of businesses themselves. Taking these factors into account, I am optimistic that Việt Nam's economy will achieve the growth target set at the beginning of the year. VNS