Vietnam weathers economic headwinds, but growth target a tough ask

The Vietnamese government has been successful in dealing with economic headwinds, but achieving economic growth of 6% this year remains an uphill battle, a deputy minister said Thursday.

At a roundtable organized by the government, Deputy Minister of Planning and Investment Tran Quoc Phuong said he highly valued the Vietnamese central bank’s effective handling of monetary policy, keeping the exchange rate stable and maintaining credit access for businesses.

Secondly, inflation has been tamed, he noted. The consumer price index (CPI), the main gauge of inflation, increased 3.16% year-on-year in the nine months through September, much below the 4.5% ceiling target.

Thirdly, despite a record high amount to be disbursed, disbursement of public investment funds reached 51% of the annual target in nine months, also the highest in years.

Last but not least, the nation has scored remarkable achievements in foreign diplomacy amid global uncertainties. This has greatly enabled macroeconomic management and growth-driven policies, the deputy minister said.

Economic growth accelerated to hit 5.33% in the July-September quarter, leading to a reading of 4.24% for the nine-month period, higher than many countries, he stressed.

The deputy minister said that to achieve 6% growth this year in the best-case scenario, the Vietnamese economy needs to growth 10.6% in the last quarter this year, requiring both demand and supply breakthroughs.

In this regard, Shantanu Chakraborty, country director of the Asian Development Bank (ADB) for Vietnam, praised the Vietnamese government’s proactive policy responses. He commented that a 6% GDP growth was still doable.

The ADB late last month revised down its growth forecasts for Vietnam to 5.8% in 2023 and 6% in 2024.

Pointing out room for improvement, Chakraborty suggested the Vietnamese government boost public investment, loosen further fiscal policy, and encourage domestic consumption. He also called for reforms to stimulate private sector investment, especially in climate-resilient infrastructure.

In the longer term, Vietnam should invest heavily in green transition and climate change adaptation, Chakraborty said.