Vietnam’s Economy Shows Signs of Recovery, Reports Deputy Prime Minister
On May 20, during the 7th session of the 15th National Assembly, Deputy Prime Minister Le Minh Khai presented a supplementary report to the National Assembly on the evaluation of the implementation of the socio-economic development plan and the state budget in 2023, as well as the results in the first months of 2024.
Previously, at the 6th session of the 15th National Assembly, the Government reported to the National Assembly on the socio-economic situation in the first nine months and the whole of 2023.
Economic Recovery Continues
According to the supplementary report, the socio-economic situation in the last months of 2023 showed a continued recovery, with each month showing more positive results than the previous one, and each quarter performing better than the last. The country has basically achieved the general goals set out and made significant progress in various fields.
The assessments and evaluations presented to the National Assembly are generally consistent, showing many positive changes. Some socio-economic indicators have exceeded the targets reported to the National Assembly.
Specifically, the GDP growth rate reached 5.05%, higher than the reported figure of 5%, although it fell short of the target set. However, this rate is considered high compared to the world and regional averages. The scale of the economy reached US$430 billion, propelling Vietnam into the group of upper-middle-income countries. Inflation was kept under control, with the average consumer price index (CPI) increasing by 3.25% (previously reported as approximately 3.5%).
The monetary and foreign exchange markets remained stable, with interest rates declining. State budget revenue exceeded VND 1,750 trillion, surpassing the estimate by 8.2% and increasing by VND 133.4 trillion compared to the previous year. The state budget deficit was about 3.5% of GDP, while public debt was about 37% of GDP, and government debt was about 34% of GDP, all of which were much lower than the ceiling and warning threshold. As of the end of 2023, about VND 680 trillion has been allocated to implement the new salary policy.
Total import and export turnover reached US$681 billion, with a trade surplus of US$28.3 billion (previously reported as approximately US$15 billion). Foreign direct investment (FDI) attraction reached US$39.4 billion (previously reported as approximately US$27-30 billion), an increase of 34.5%; FDI disbursement reached US$23.2 billion (previously reported as approximately US$20-22 billion), an increase of 3.5%, the highest ever.
Reputable international organizations have highly appraised Vietnam’s economic performance and prospects. Fitch Ratings upgraded Vietnam’s long-term foreign currency issuer default rating to ‘BB+’ (from ‘BB’) with a stable outlook. Vietnam’s business environment ranking improved by 12 places in 2023, and the Global Innovation Index also rose by two places.
According to Deputy Prime Minister Le Minh Khai, in the context of rapid, complex, and unpredictable global and regional changes, the achievements of 2023 are noteworthy and a source of pride and appreciation.
“However, Vietnam still faces certain limitations and challenges. Economic growth has not yet reached the set target,” the Deputy Prime Minister pointed out, identifying issues such as difficulties in production and business activities, access to credit, and cumbersome investment and business procedures.
Positive Results in Addressing Long-standing Issues and Projects
Reporting to the National Assembly on the handling of long-standing issues and projects, the Deputy Prime Minister stated that positive results have been achieved in this regard.
The necessary documentation and conditions for considering and approving the compulsory transfer of weak banks have been prepared. It is expected that the valuation of the three banks subject to compulsory purchase will be completed, and the proposal for the compulsory transfer will be submitted to the competent authority for approval in May 2024. The compulsory transfer is expected to be completed within 2024, according to the report.
Last year, the State Bank of Vietnam was granted approval by the competent authority for the compulsory transfer of three banks: CBBank, OceanBank, and GPBank.
The report also stated that the restructuring plan for the Vietnam Development Bank has been implemented and has yielded initial results. The financial situation has been balanced, with accumulated losses and debt showing a downward trend. As of April 30, 2024, accumulated losses have decreased by 20%, and bad debts have decreased by 37.7% (a reduction of VND 15,000 billion). The organizational structure has been streamlined to 30 units, a reduction of 35%.
The three fertilizer plants (Ha Bac, Ninh Binh, and DAP No. 2 Lao Cai) are in the process of restructuring their debts and have started making profits. In the first four months of this year, the total revenue of the three fertilizer plant projects reached VND 3,937 billion, with a profit of VND 75.2 billion. Their products were fully consumed, and the machinery operated stably at high capacity (over 90%).
The report also mentioned that the Government issued Resolution No. 220/NQ-CP on December 22, 2023, on the plan to implement the Conclusion of the Political Bureau on the policy on handling the Vietnam Shipbuilding Industry Corporation. At the same time, efforts have been made to resolve obstacles in many important power and energy projects, including the approval of the investment policy and the signing of the power and gas purchase and sale contracts for the Lot B-Om Gas Power Project. The Nghi Son Refinery and Petrochemical Project has initiated restructuring of management and operations and optimization of production and business activities. The Long Phu 1 Power Project is currently negotiating and addressing obstacles to restart the project.
Regarding the implementation of the socio-economic development plan in the first months of 2024, Deputy Prime Minister Le Minh Khai emphasized that the Government and the Prime Minister have directed ministries, sectors, and localities to focus on implementing Resolutions No. 01 and 02, as well as other resolutions of the Government, striving to achieve the best results in the socio-economic development plan for 2024.
In the first four months of 2024, the macro-economy remained stable, inflation was controlled, and major balances were ensured. GDP growth in the first quarter of 2024 reached 5.66%, the highest in the period from 2020 to 2023. This achievement reflects a significant effort in the context of numerous economic challenges. The average consumer price index (CPI) in the first four months increased by 3.93% compared to the same period last year. The monetary policy has been flexibly administered, and interest rates have been reduced to support economic growth.
The Deputy Prime Minister also outlined 11 groups of tasks and solutions to be implemented in the coming time. Priority will be given to promoting growth in conjunction with macroeconomic stability, inflation control, and ensuring the major balances of the economy. There will also be close and effective coordination in macroeconomic management policies.
“The task of implementing the socio-economic development plan in the remaining months of 2024 is very heavy. However, with a spirit of solidarity, dynamism, innovation, and creativity, along with self-reliance, self-improvement, higher determination, greater efforts, and more decisive actions, we will surely overcome difficulties, rise to challenges, seize opportunities, and promote economic development in a fast and sustainable manner,” Deputy Prime Minister Le Minh Khai emphasized before the National Assembly.
