At a national online conference between the government and localities and the government's regular meeting in June, the Ministry of Planning and Investment (MPI) presented two scenarios for growth for the second half of 2023.

With Scenario 1, the GDP growth rate of the whole year would be 6 percent with 6.8 percent for the third quarter and 9 percent for the fourth quarter, or 0.3 and 1.9 percentage points higher compared with the scenario in Resolution 01. This means the average growth rate must be at least 8 percent in the last six months.

With Scenario 2, the GDP growth rate is expected to reach 6.5 percent with 7.4 percent for the third quarter and 10.3 percent for the fourth quarter, or 0.9 and 3.2 percentage points higher compared in Resolution 01, which means the average growth rate must be 8.9 percent in the second half.

The two scenarios are based on the modest growth rate of 3.72 percent in the first half, which was lower than the planned 6.2 percent in Resolution 01. The growth rate was the lowest in the 2011-2023 period, just second to the 1.74 percent growth in the first half of 2020, when the country was under lockdown because of Covid-19.

To obtain the targeted growth rate set for 2023 by the National Assembly, the GDP growth rate in the second half must be 8-8.9 percent or higher.

Dung said that the tasks were challenging and that it is necessary to overcome obstacles to fulfill the growth scenarios.

Vietnam was able to obtain a high growth rate about 30 years ago. In the 1990s, Vietnam’s economy grew by 8-9.5 percent thanks to Doi Moi (renovation) and Hoi Nhap (integration).

However, such a high growth rate has not been repeated since then. Economists calculate that in the first 10-year development period (1991-2000), the average GDP growth rate was 7.56 percent. In the second 10-year development period (2001-2010), the growth rate was 6.61 percent. The figure was 6 percent in the third period, while it is expected to reach 5.6 percent in the first three years of the fourth 10-year period.

In order to obtain the average growth rate of 7 percent as shown in the 2021-2025 development strategy, the economic growth rates in 2024 and 2025 need to be 9 percent per annum, a difficult mission at this time.

Meanwhile, obtaining a high GDP growth rate is an important goal of the country, because it is the way for Vietnam to narrow the development gap with developed countries.

Short-term difficulties

The tasks for the upcoming six months are challenging. Production and business are stagnant as enterprises’ resilience has reached the critical point, while expansion of markets faces difficulties.

As enterprises’ business performance is weak, the state budget collection has been affected. The total collections in the first six months decreased by 7.8 percent compared with the same period last year.

Enterprises complain about difficulties in market access, cash flow and administrative procedures. 

The markets have shrunk, while inventories have increased (the inventory level was 83.1 percent on average in the first half). 

Exports dropped in the first six months compared to the same period last year by 12.1 percent, especially key products such as mobile phones and phone accessories (- 17.9 percent), electronics, computers and accessories (- 9.3 percent), textiles and garments (- 15.3 percent), footwear (- 15.2 percent) and seafood (- 27.4 percent).

Meanwhile, one-third of manufacturing and processing enterprises had to cut production in the second quarter, and nearly 40 percent predicted that production volume would decrease in the third quarter. 

About 38 percent of enterprises had orders in the second quarter lower than in the first quarter, according to the General Statistics Office (GSO).

The number of outstanding loans increased by 3.58 percent as of June 20, much lower than the 8.11 percent in the same period last year. 

Many enterprises have had to adjust business plans because of problems in resources. In Hanoi, HCM City, Bac Giang, Bac Ninh, Dong Nai and Binh Duong, businesses have had to cut the workforce.

Solutions

The things that need to be done in the time to come include:

Setting up the regulations to encourage and protect the cadres who ‘dare to think and dare to do’ and make a breakthrough for the sake of mutual benefits.

Strengthening the administrative procedures, improving the business environment, creating more favorable conditions for people and businesses.

Promoting the application of digital technology in management and administrative procedure handling.

Tu Giang