Today (October 15th), the Institute of Economics and Policy Research (VEPR) released its quarterly economic report for the third quarter, updating two growth scenarios for the fourth quarter and the whole year.
In the high scenario, fourth-quarter growth will be flat at 7.4%, and annual growth is expected to reach the new target of 7% set by the government.
In the low scenario, fourth-quarter growth will be below 7%, with GDP fluctuating around 6.84%.
Forecast/actual growth rates of Vietnam over the years, and VEPR’s two growth scenarios for 2024.
Summarizing the current economic picture, Dr. Nguyen Quoc Viet, Vice President of VEPR, stated that GDP growth after nine months reached 6.82%, 1.5 times higher than the same period last year, mainly contributed by the industry and services sectors. On the demand side, trade is on a recovery path, and foreign direct investment (FDI) inflows serve as the primary growth driver. Vietnam achieved a trade surplus of US$20.8 billion, a high figure during the 2020-2024 period.
Revenue collection exceeded plans, while public spending decreased compared to the same period in 2023, resulting in a continued budget surplus, creating room for fiscal policies such as tax exemptions, reductions, and extensions, especially in the context of industries and fields affected by Typhoon Yagi.
The US dollar exchange rate at domestic commercial banks has continuously decreased. The growth rate of money supply and credit growth recovered quite well, positively contributing to promoting growth and investment, although it is still lower than the pre-COVID-19 average.
Dr. Nguyen Quoc Viet, Vice President of VEPR.
“The economy has many positive highlights, but there are still risks and challenges ahead,” said Dr. Viet.
According to Dr. Viet, the Purchasing Managers’ Index (PMI) declined, falling below 50 points in September. The ratio of withdrawing businesses to entering businesses remains high. Domestic consumption and public investment disbursement have not met expectations.
Economist Pham Chi Lan stated that third-quarter growth still relied on exports and the performance of FDI enterprises. For many years, domestic consumption and investment have not significantly contributed to growth.
Additionally, the business environment poses risks and challenges, with conditions for business and administrative procedures tending to increase due to weakened reform momentum from ministries and sectors. Data on the business sector reflects this situation. In the past nine months, the number of businesses withdrawing from the market remained high, with 163,700 businesses ceasing operations, a significant increase since 2020.
