Demand recovery expected to drive GDP growth: Experts
A big challenge for the economy to reach this year’s GDP growth target of 6.5 per cent, and economic expansion is hoped to be boosted by some important demand factors in the second half of 2023.
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A big challenge for the economy to reach this year’s GDP growth target of 6.5 per cent, and economic expansion is hoped to be boosted by some important demand factors in the second half of 2023.
With an economic panorama not so bright in H1, a growth rate of 6.5 per cent for this year is a highly challenging target, they told a macro-economic forum held by the Ho Chi Minh City University of Banking (HUB) on July 18.
Except for 2020 which was impacted by the COVID-19 pandemic, the GDP growth rates in the first and second quarters of 2023 were the lowest compared to the same periods of recent years. Growth was not positive in all sectors, especially industry, and construction, a HUB research group pointed out.
Industrial production is facing a year full of difficulties due to falling consumption demand in many countries that are large trading partners of Vietnam as they have been tightening their monetary policy to curb inflation.
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| The factory of the Tsuchiya Tsco Co. Ltd in the Thang Long Industrial Park of Vinh Phuc province. |
The industry and construction sector’s added value increased by a mere 0.44 per cent in H1, the slowest H1 expansion since 2011, and contributed only 0.15 percentage points to the overall growth in the economy’s added value.
Given the strong decline in this sector, experts held that this is one of the main factors affecting Vietnam’s economic growth in H2.
HUB Rector Assoc. Prof. and Dr. Nguyen Duc Trung said the H1 growth was only 3.72 per cent, a 14-year low, so it is very difficult to achieve this year’s target of 6.5 per cent.
Some growth-hampering factors include the possibility of global economic recession, the monetary policies tightened to rein in inflation in developed countries, along with geopolitical tensions in some countries and their global influence. As a result, industrial production will continue enduring severe impacts, and the processing and manufacturing industry may lose its role as the biggest growth driver, he elaborated.
Based on the H1 economic situation, the research group issued two growth scenarios for 2023. Accordingly, GDP may rise by 5.8 - 6.3 per cent in the low-case scenario, or reach the Government-set target or even higher, 6.5 - 6.8 per cent, in the positive one.
For his part, HUB Vice Rector Assoc. Prof. and Dr. Nguyen Khac Quoc Bao perceived that despite numerous difficulties and challenges, this year’s economic growth will reach the target of 6.5 per cent while inflation is within the cap of 4.5 per cent as predicted by some state agencies.
At the forum, experts said the 2023 growth will be fueled by some important demand factors.
The recovery of consumption demand curbed during the pandemic-hit years has yet to show signs of stagnation despite less optimistic growth forecasts. Efforts to disburse public investment may help foster construction and related economic activities in H2. The monetary policy may be eased further to stimulate demand. Besides, the re-opening of the Chinese market is expected to help shore up global supply chains, as well as import and tourism demand from the world’s second-largest economy, they explained.
(Source: Vietnamplus)
