The 5.05% economic growth rate in 2023 is a very low figure compared to previous years, except for the years affected by the Covid-19 pandemic. However, considering the specific conditions and circumstances of 2023, this can be seen as a commendable success as Vietnam still ranks among the top 20 countries with the highest GDP growth rate in the world in 2023.
Particularly, maintaining macroeconomic stability, stable currency value, the USD/VND exchange rate of only 1.86%; the CPI, inflation rate being controlled at 3.25%, lower than the target set by the National Assembly, is considered a highlight of the economy in the region and the world. With the three main drivers of investment, consumption, and exports, Vietnam’s economy recorded higher growth in the following months, especially with a breakthrough in the fourth quarter of 2023.
STILL A DECLINE IN STRONG GROWTH TOWARD THE END OF THE YEAR
The three traditional growth drivers (investment, consumption, and exports) are compared to a “three-horse cart” in promoting Vietnam’s economic growth in 2023.
First, the monthly export situation, most months have a higher export turnover in the following month compared to the previous month, which reflects the efforts of businesses, with the exception of January and April with a significant decrease. Therefore, both export and import turnover compared to the same period last year still decreased, but the rate of decrease is gradually decreasing.
In the fourth quarter of 2023, the estimated export turnover reached USD 96.5 billion, an increase of 8.8% compared to the same period last year and an increase of 3.2% compared to the third quarter of 2023. For the whole year 2023, the estimated export turnover of goods reached USD 355.5 billion, a decrease of 4.4% compared to the previous year. In the fourth quarter of 2023, the estimated import turnover reached USD 90.2 billion, an increase of 8% compared to the same period last year and an increase of 6.3% compared to the third quarter of 2023. In general, for the whole year 2023, the estimated import turnover of goods reached USD 327.5 billion, a decrease of 8.9% compared to the previous year.
From July and August 2023, due to many sectors such as textiles, footwear, computers, electronic products and components; phones and components having additional orders, export and import turnover increased significantly, helping Vietnam’s export and import turnover come closer to that of 2022.
Thus, in 2023, the total export and import turnover of the whole country reached over USD 681 billion, a decrease of 6.9%, equivalent to a decrease of USD 50.25 billion compared to the previous year. The trade balance still maintained a surplus of USD 28 billion, significantly higher than the surplus of USD 12.1 billion in 2022.
Second, the index of total retail sales of goods and revenue from service consumption, both absolute and relative numbers compared to the previous month, increased in most months (with a decrease only in February 2023).
However, the growth rate of the index of total retail sales of goods and revenue from service consumption decreased significantly. In January 2023, the growth rate compared to the same period in 2022 was 20%; in February it was 13.2%, in March it decreased to 13.4%; in April and May it decreased to 11.5%, and in June it decreased to 6.5%.
Notably, there was a resurgence when implementing the strong measures of the National Assembly and the Government, such as reducing the value-added tax from 10% to 8% for many types of goods from July 1, 2023, exempting 36 types of fees and charges; deferring tax payment, land rent, water surface rent for businesses, along with the State Bank four times reducing the operating interest rates and based on that, the mobilizing interest rates and lending interest rates decreased significantly.
In July 2023, the index of total retail sales of goods and revenue from service consumption increased by 7.1%, in August it increased by 7.6%, and in September it increased by 7.5%, helping this index to increase by 9.7% in 9 months compared to the same period last year.
The total retail sales of goods and revenue from service consumption in the fourth quarter of 2023 increased by 9.3% compared to the same period in 2022. In general, in 2023, the total retail sales of goods and revenue from service consumption at current prices reached VND 6,231.8 trillion, an increase of 9.6% compared to the previous year (an increase of 20% in 2022), if excluding the price factor, it increased by 7.1% (an increase of 15.8% in 2022).
Third, the total social investment capital in the fourth quarter of 2023 at current prices was estimated to reach VND 1,164.1 trillion, an increase of 7.1% compared to the same period last year. The estimated investment capital for the whole year 2023 at current prices reached VND 3,423.5 trillion, an increase of 6.2% compared to the previous year.
The disbursement of public investment has achieved significant growth. The disbursement in 2023 was higher than the same period in 2022 in both relative and absolute numbers.
The total registered foreign direct investment in Vietnam as of December 20, 2023, reached nearly USD 36.6 billion, an increase of 32.1% compared to 2022. Foreign direct investment implemented in Vietnam in 2023 was estimated at USD 23.18 billion, an increase of 3.5% compared to the previous year. This is the highest foreign direct investment in the past 5 years.
DOMESTIC ECONOMY CONTINUES TO RECOVER
In 2024, although the global economic situation still has complex developments, the global economy is gradually recovering.
The factors affecting Vietnam’s growth in 2024 include objective factors from the impact of the global economy and internal factors of the economy.
First of all, global inflation tends to remain low but still at a relatively high level which may cause imported inflation for the Vietnamese economy.
According to the World Economic Outlook report of the International Monetary Fund (IMF), basic inflation is expected to decrease from 9.2% in 2022 to 5.9% in 2023 and may continue to decrease to about 4.8% in 2024. Core inflation, excluding food and energy prices, is also expected to decrease to 4.5%. This may create difficulties for capital mobilization activities and slow down the global economic recovery rate. The demand for materials, supplies, accessories for production and consumer goods remains high, causing difficulties for Vietnam’s export activities.
Second, along with the decrease in inflation, the prices of many natural resources and input materials for production may decrease as the economy continues to recover slowly and the global demand is not high.
The price of oil may stabilize or slightly decrease reflecting concerns about the slowing global demand and the tension in the financial market. Many metals and raw materials will stabilize or have a slight increase. The price decrease reflects the recovery of supply after the production disruption in 2023, as well as the decrease in global commodity demand.
Third, along with the decrease in inflation, many countries may implement interest rate cuts and measures to support economic recovery and development. The economies of some countries may grow better, the global economic demand will increase, and international trade activities may also increase. Global growth is forecasted to reach 2.4% in 2024, adjusting down by 0.3% compared to 2023.
Fourth, tourism, services, and import-export activities in 2023 tend to have a high growth rate, which can drive high economic growth in 2024.
Fifth, to support businesses in economic recovery and development, recently, the National Assembly and the Government have implemented many policies to exempt and reduce many types of taxes, fees, and charges for businesses, thereby helping to reduce the pressure of price increases on the economy.
The Government issued Decree 94/2023/NĐ-CP stipulating the value-added tax reduction policy according to Resolution No. 110/2023/QH15 dated November 29, 2023, of the National Assembly. At the same time, the Ministry of Finance is considering the possibility of exempting and reducing various types of fees and taxes. This is the basis for lowering prices of many goods, promoting consumption, increasing the turnover of capital, and increasing the efficiency of economic growth.
Sixth, foreign direct investment realized in Vietnam in 2023, including newly registered capital, adjusted registered capital, and contributed capital, and shares bought by foreign investors, reached nearly USD 36.6 billion, an increase of 32.1% compared to the previous year. Foreign direct investment realized in Vietnam in 2023 was estimated at USD 23.18 billion, an increase of 3.5% compared to the previous year. This is the highest amount of foreign direct investment realized in the past 5 years.
Foreign direct investment is likely to continue to have a high disbursement in 2024 and it can also help ease the tension of VND exchange rates against foreign currencies. The high disbursement of foreign direct investment will have a positive effect on economic growth.
It is predicted that in 2024, if oil prices and raw material supply do not increase, inflation in major economies still remains at a high level, and global economic recovery is slow, Vietnamese businesses can take advantage of opportunities from free trade agreements, and the Vietnamese economy can achieve a growth rate of 5.5-6.5%, and the inflation rate for the whole year will be around 3.2-3.5%.
SYNCHRONOUS SOLUTIONS TO STRENGTHEN EXPORT AND IMPORT
In order to accomplish the tasks set by the National Assembly and the Government for 2024, promote the growth drivers of the economy in 2024, and lay the foundation for economic growth in the following years, it is necessary to implement resolute, timely, and synchronous solutions…