Vietnamese GDP growth unlikely to fulfill 6.5% target this year: VEPR

Viet made the statement during a workshop held on June 20 in Hanoi to unveil the Vietnam Annual Economic Report 2024.

According to details set out in VEPR’s report, the Vietnamese economy in the second half of the year is expected to grow better compared to the same period from last year due to the acceleration of public investment disbursement and a rebound in exports, as well as the Government’s support policies aimed at removing difficulties for businesses.

VEPR experts also put forward three growth scenarios at the workshop. In the first scenario, the country is projected to fail to achieve the GDP growth target of 6.5% due to a contraction in the public sector coupled with weak internal and external consumer demand.

Furthermore, the risks of increasing the exchange rate in the second half of the year are fueled by inflationary pressure along with a general reduction in investment by the private sector.

In the second scenario, the country’s GDP growth is forecast to reach 5.85%, with the inflation rate being at 4.5%. Indeed, the average annual VND exchange rate depreciates at between 5% and 6% this year.

Public investment disbursement meets the set target while foreign direct investment (FDI) is anticipated to not see any unusual fluctuations in the second half of the year.

In the third scenario, the GDP growth is expected to stand at 6.01% with a policy adjustment which seeks to reduce the difference in interest rates between domestic VND and strong foreign currencies in the international market.

In this scenario, public and private investment will witness positive signs thanks to improved investment climate and effective control of inflation at 5%.

As a means of achieving the economic development goals, the VEPR recommends that priorities should be given to fiscal policies, including monetary policies and the efficiency of public investment disbursement in the remaining months of the year.

Economists also proposed moving to extend several policies in a bid to support firms and people for the 2024-2025 period, whilst simultaneously promoting the aggregate demand in the economy and accelerate credit growth.

They also suggested moving to extend the current 2% VAT reduction policy until the end of 2024 or June, 2025.

In the medium and long term, there should be more credit packages for enterprises to invest in sustainable production, while simultaneously promoting digital transformation and increasing the application of green technology in production activities, think tanks stressed. 

Source: VOV