While Vietnam’s growth gathered pace in the third quarter, private domestic investment and investors’ confidence remained weak, according to a World Bank report.
The September edition of the World Bank Vietnam Macro Monitoring report says Q3/2023 economic growth reached 5.3%, higher than 4.1% in Q2/2023, thanks to a recovery in industrial production, reflected by an uptick in exports.
However, domestic consumption remained subdued, as seen in the modest growth of retail sales of goods and services at 2.4% month-on-month and 9.4% year-on-year in September, below the pre-pandemic level of 11-12%.
Furthermore, credit growth decelerated from 9.4% year-on-year in August to 8.7% in September, also below the pre-pandemic period.
These two factors indicated weak private domestic investment and investors’ confidence, the report emphasized, adding that another notable factor was the sharp upward trend in headline inflation.
The bank suggested Vietnam should continue efforts to disburse public investment to support aggregate demand and economic growth in the short run. For long-term economic development, the country should build a strategic and well-prepared investment pipeline for 2024 and the next medium-term investment plan with a focus on green, resilient and regional infrastructure, it said.
Vietnam should also focus on further improving its business environment and stepping up investment in human capital to attract high-tech and high-value-added foreign direct investment (FDI) and boost productivity in the long run, the Word Bank said.