Vietnam faces more serious economic headwinds than expected: parliament chair

Several of the multiple challenges facing the Vietnamese economy are more serious than previously thought, National Assembly Chairman Vuong Dinh Hue said Tuesday.

Besides, several economic drivers have lost steam, Hue told the annual Vietnam Socioeconomic Forum.

"A large number of companies have seen their resilience undermined, the labor market was struggling and there was a lack of domestic businesses capable of leading and forging sustainable supply chains or local manufacturing ecosystems," he noted.

The endogenous capacity and self-reliance of businesses and the economy remained limited and internal economic weaknesses have been increasingly exposed to the adverse impacts of world economic and political developments from early 2021, when the current government was formed, Hue said. He urged the government to implement both short and long-term solutions.

Recognizing that Vietnam has steadily weathered headwinds since 2021 and recorded a host of important achievements, including positive economic growth and stable macro fundamentals, the NA chairman said some of the driving forces have slowed down, making it difficult to achieve growth targets set for 2023 and until 2030.

Vietnam’s GDP expanded 3.72% in the first half of this year, nearly the weakest in the past 12 years, he noted. The country’s exports fell 10% year-on-year during this period, the steepest fall in the last 12 years. Other troubles included struggling corporate bond and real estate markets, a lack of major foreign-invested projects with strong spillover effects, and sluggish disbursement of public funds.

The NA chairman, former deputy prime minister in charge of economic management, said a precious lesson to remember is that strong internal forces have to be built in order to deal with external challenges and uncertainties.

Nguyen Xuan Thang, president of the Ho Chi Minh National Academy of Politics (HCMA) and chairman of the Central Theory Council, said the Vietnamese economy had seen troubles surface after remaining undercover for years in the corporate bond, real estate and securities markets. He said the problems had come to light only in the aftermath of the Covid-19 pandemic.

Vietnam’s economy has been through its worst moments, but it is currently facing hurdles that need more than short-term solutions, Thang said, citing lower-than-expected economic growth, potential downside risks to macro factors and a possible fallout of the corporate bond and real estate markets.

The Vietnam Socio-economic Forum 2023, held Tuesday in Hanoi, focused on self-reliance and drivers for the country’s sustainable development. It was co-hosted by the NA’s Economic Committee, the Party Central Economic Commission, HCMA and Vietnam Academy of Social Sciences.