Promoting Growth with Macroeconomic Stability

The year 2024 is pivotal for Vietnam as it advances the implementation of resolutions established by the 13th National Party Congress and the National Assembly. These resolutions are critical to the successful execution of the five-year socioeconomic development plan (2021-2025).

The processing and manufacturing sector serves as the catalyst propelling the growth trajectory of the entire industrial landscape

Navigating challenges

At the 7th plenary meeting of the 15th National Assembly, Deputy Prime Minister Le Minh Khai highlighted Vietnam’s remarkable achievements in 2023. Despite operating in a fast-changing, complex and unpredictable global environment, the country achieved a gross domestic product (GDP) growth rate of 5.05%, propelling it into the group of upper-middle-income countries with a total GDP of US$430 billion. Inflation remained well-controlled, with the consumer price index rising by 3.25%.

However, Vietnam also grappled with significant limitations and obstacles. Economic growth fell short of the set target, and businesses faced challenges in accessing credit. Labor productivity growth lagged behind expectations, and investment procedures remained cumbersome.

In the first months of 2024, macroeconomic performance stabilized, inflation remained under control, and key balances were secured. The first quarter of 2024 witnessed impressive GDP growth at 5.66%, the highest quarterly rate between 2020 and 2023. Deputy Prime Minister Khai acknowledged the collective effort to maintain stability despite the prevailing difficulties. The 4-month average consumer price index (CPI) grew by 3.93% year on year, prompting the introduction of accommodative monetary policies and interest rate cuts to support economic growth.

Yet, challenges persisted. Industrial production recovery was sluggish, and the Mekong Delta region faced severe hardships due to prolonged droughts and saltwater intrusion affecting agricultural output. The real estate market’s slow recovery and delays in disbursing the VND120 trillion social housing loan package added to the complexity.

Notably, infrastructure development faced hurdles, with key highways and traffic routes progressing slowly due to unfavorable site clearance. Efforts to streamline mechanisms, policies, regulations and administrative procedures were ongoing but gradual.

Strategizing for economic stability

Chairman of the National Assembly's Economic Commission Vu Hong Thanh said the pivotal year of 2024 is very important to accelerate the successful implementation of the resolutions of the 13th National Party Congress and the National Assembly on the 5-year socioeconomic development plan in 2021-2025.

At the start of this year, the National Assembly held the 5th extraordinary session to consider important contents, including the ratification of the amended Land Law and the amended Law on Credit Organizations. The Government and the Prime Minister have directed implementing socioeconomic development tasks and state budget targets, improving the business environment and enhancing national competitiveness. As a result, economic growth recovered quite positively.

To complete the economic growth target and other goals and tasks as per the Resolution on the 2024 Socioeconomic Development Plan and other resolutions of the National Assembly in the coming months of 2024, the Government needs to continue to effectively implement key tasks and solutions stated in this resolution, he said. In particular, it is necessary to strengthen the endogenous capacity force, accelerate rapid and sustainable economic growth, stabilize the macroeconomy and ensure major economic balances. The Government also needs to control inflation and exchange rates to avoid shocks to people and companies as well as import and export activities. There is an urgent need for an effective solution to clear bottlenecks in labor productivity; speed up the transition to and use of clean energy, digital transformation, and scientific and technological application; quickly and effectively carry out the Power Planning 8. It needs to ensure the supply of essential goods, especially electricity, gasoline and oil, to prevent the recurrence of electricity shortages that hurt production and business activities as well as people's livelihoods.

Besides, the Government needs to continue to manage the monetary policy in a truly active, flexible, timely and effective manner; maintain stable liquidity and the safety of the banking system; drastically and effectively carry out the credit institution restructuring project alongside with handling nonperforming loans and treating weak banks; introduce fundamental and sustainable solutions to direct cash flows back to production and business activities, and adopt interest rate cut solutions; reinforce the management and supervision of the stock market, corporate bond market and real estate market together with solutions to stabilize and develop markets and build up investor confidence; and harmonize monetary policy and fiscal policy to support economic growth.

Deputy Prime Minister Le Minh Khai outlined 11 key areas for action. Prioritizing growth and macroeconomic stability, controlling inflation, and ensuring economic equilibrium are at the forefront. Effective coordination of macroeconomic management policies will be pivotal.

Additionally, Vietnam remains committed to process reforms, high-quality lawmaking and targeted economic restructuring. The nation is poised to embrace the digital economy, green practices, circular models and emerging industries.

It is necessary to speed up the progress of important national and inter-regional transport infrastructure projects, especially the construction and operation of 1,000 km of new expressways so as to bring the total length of open highways to about 3,000 km by 2025 to open up a new development space, create new development driving forces and reduce logistics costs. Last but not least, Vietnam will focus on developing high-quality human resources; speed up research, development and application of science and technology; and drastically implement fundamental and comprehensive education and training reforms.

By Nguyen Mai, Vietnam Business Forum