Despite the efforts of the operators to stimulate investment and domestic consumption, there are still certain obstacles. For example, interest rate supporting packages have not had a great impact, although interest rate conditions have been more favorable with 3 reductions in interest rates since the beginning of the year, but the credit growth rate has only reached over 3% in the first 6 months of the year (in the same period last year, it increased by 8.5%).

We still have bright and dark colors intertwined in the economic picture of Vietnam. With current policies and advantages, Vietnam is still an ideal destination for foreign investment flows besides the young population structure, and accelerated domestic consumption. However, a lower-than-expected growth rate in the context of a weakening global economy is inevitable. Therefore, we believe that the economic growth target of 6.5% for the whole year is not feasible.

Let’s take a look at the factors affecting the economic outlook in the second half of the year:

Positive factors:

• Industrial production in the third quarter was more optimistic than the first two quarters based on a survey of business opinions on business prospects in the second half of the year. More than 70% of businesses believe that orders and production will improve.
• Exports of agricultural products are expected to improve thanks to high output according to seasonal factors. While exports of key commodities improved compared to the first half of the year.
• The room to increase revenue from tourism is still large. In addition to the Chinese visitors, which has not yet recovered well, the exploitation of visitors from Korea and other countries also brings positive expectations.
• Disbursement of public investment is expected to accelerate in the second half of the year in key transport and energy investment projects.

 

Risks:

• The spillover effects of public investment are still slow because many large projects have not been disbursed and implemented.
• The main export markets are still grappling with the inflation curb and cannot recover quickly in the short term.
• Although exchange rate pressure is not as great as last year, it is still necessary to be cautious with the scenario of capital flows out of Vietnam if the economic outlook is still less optimistic and the Fed continues to tighten monetary policy.

With the above views, GTJA (Vietnam) makes a forecast for Vietnam’s economy this year as follows:

GTJA Vietnam forecast

GTJA FORECAST		Conservative	Base case	Optimistic
GDP 2023 growth	%	4.5%	5.0%	5.5%
Inflation	%	4.5%	4%	3.5%