Vietnam economy shows signs of recovery in Q2: minister

Vietnam’s macroeconomy has stabilized and showed signs of better growth in the second quarter of this year, said Minister of Planning and Investment Nguyen Chi Dung.

Speaking at the government’s regular meeting on Saturday, Dung noted that the index of industrial production (IIP) rose 2.2% in May from April. The figure for manufacturing and processing was estimated at 2.9%.

Additionally, the monetary market is stable, with decreasing loan interest rates, stabilized exchange rates, and positive state budget collection, he said.

In May, export-import activities recovered with a total turnover of $55.86 billion, up 5.3% from April. Registered foreign direct investment (FDI) capital doubled year-on-year to nearly $2 billion in May.

The government has issued directives to ease problems in the real estate market, and respond to the scorching weather, water shortages, and salinization. The freshly approved Power Development Plan VIII (PDP VIII) is expected to support the renewable energy sector and ensure national energy security, the minister added.

Challenges remain

Minister Dung also pointed out challenges facing the economy, especially global impacts on Vietnam which cannot be solved overnight. Meanwhile, business resilience has been pushed to the limit during the post-pandemic period.

Overall, in the last five months, the economy welcomed 95,000 new businesses, down 3.7% year-on-year, including newly-registered ones and returning enterprises, while 88,000 others left, up 22.6%.

Registered foreign direct investment (FDI) capital in Vietnam declined 7.3% year-on-year to nearly $10.86 billion in the first five months of the year, while disbursed capital dropped 0.8% to $7.56 billion.

Despite growth in May, the IIP dropped 2% year-on-year in January-May, the minister stressed.

Similarly, Vietnam’s import-export turnover dropped 14.7% year-on-year to $262.54 billion in the five-month period. The country recorded an export revenue of $136.17 billion, down 11.6%, while import expenditure fell 17.9% to $126.37 billion. As a result, Vietnam's trade surplus reached $9.8 billion, versus $0.24 billion in the same period last year.

For solutions, the ministry proposed the Ministry of Finance apply tighter control on state budget spending and collection, lower tax, extension of tax payment deadlines, quicker tax refund, assistance to the corporate bonds market.

The Ministry of Planning and Investment suggested the State Bank of Vietnam help further reduce the interest rates, stabilize the exchange rate, and effienciently disburse credit packages.

The ministry also asked relevant agencies to improve the business environment by updating rules on business conditions and inspection, while ameliorating FDI attraction policy.

Vietnam posted a GDP growth of 3.32% in the first quarter of 2023 compared to a year earlier, the General Statistics Office reported.

Standard Chartered Bank has lowered Vietnam’s 2023 GDP growth forecast to 6.5% from the previous 7.2% and got more cautious on the external front. In April, the OECD anticipated Vietnam is likely to achieve GDP growth of 6.5% in 2023 and 6.6% in 2024. Also in April, the International Monetary Fund (IMF) projected Vietnam’s GDP growth might slow down to 5.8% in 2023 and then rebound to 6.9% in 2024