VietNamNet spoke with Vicente Nguyen, CIO of AFC Vietnam Fund, about Vietnam’s economic performance in 2023.

Despite difficulties, Vietnam’s economy saw impressive recovery in 2023 with macroeconomic indexes stable and GDP growth rate high at 5 percent. What can you say about the government’s efforts to recover the economy last year?

The government made great efforts, such as stabilizing the finance and banking market, forcing interest rates down, cutting taxes and fees, and accelerating public investment.

The speeding up of the Long Thanh International Airport project has brought certain results, thanks to which the national economy bounced back in the last quarter of 2023.

The World Bank and HSBC have predicted that the GDP growth rate is expected to be the second largest in Southeast Asia in 2024. What is your comment about these predictions?

We have been taking full advantage of opportunities to develop the national economy. Large economies, including the EU and the US, have shown interest in Vietnam, which helps us become a ‘magnet’ that attracts foreign direct investment (FDI).

Becoming the economy with the second highest GDP growth rate in 2024 in SE Asia, or even the next one or two decades is feasible.

Vietnam has high openness with a series of free trade agreements (FTAs). What do you think about Vietnam’s manufacturing sector and exports in 2024?

In 2023, the global economy faced difficulties. Inflation rates were high in the US and EU and the markets increased interest rates, which led to sharp falls in goods consumption. Vietnam’s exports thus faced difficulties. 2023 was the first year in the last 14 years that Vietnam saw a negative export growth rate.

However, the situation is different this year. The export growth rate was positive again in the last four months of 2023. The demand recovery in large economies and the possibility of a US interest rate cut will help Vietnam boost its exports.

The credit growth rate reached 13.71 percent thanks to the jump in the last month of 2023. Do you think the high credit growth rate in the last month of the year is a positive sign?

I am sure the economy will be better this year. The economic and financial situation will also step by step be better thanks to the government’s measures to stimulate demand. However, disbursement for public investment showed problems in late 2023.

Could you please elaborate on this?

I think the deposit interest rate has bottomed out. What needs to be done now is not continue to force deposit interest rates down, but lending interest rates, and speed up disbursement. 

Credit grew by only 9 percent by November 2023, which showed that businesses were hesitating to make investments and people were hesitating to borrow money to fund their consumer needs. It is necessary to restore confidence in investment and consumption because this will help increase credit.

The State Bank of Vietnam (SBV) believes the Vietnam dong will be stable in 2024. What do you think?

I believe the dong will continue to be stable in 2024, and even in 2025 and the next 10 years, because exports will grow well and FDI capital is high. So, it is understandable why the local currency appreciates.

The investment from the private sector only grew by 2.7 percent, a 10-year low and lower than the 3.1 percent during Covid-19 years. What are the reasons behind this?

Because of economic uncertainties all over the globe, consumption, exports and jobs decreased, leading to loss of confidence. Besides, some policies remained unreasonable, which posed risks in doing business.

A number of huge transport infrastructure projects have started, including Long Thanh Airport, highways, subways and belt roads in Hanoi and HCM City. What can you say about the feasibility of the projects and the possible impact on the national economy?

Public investment accounts for 5 percent of GDP. If public investment increases by 20 percent, it will make up one percent of GDP. The projects will not only help stimulate demand in the short term, but also bring long-term benefits.

Manh Ha