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The global economy is unstable, challenging Vietnam's growth

GDP growth in the third quarter of 2023 is expected to exceed the level of the second quarter of 2023 when the economy in July and August 2023 shows many signs of improvement. But growth pressure is still challenging when the global economy still has many unpredictable developments...

With economic data recently announced by the General Statistics Office, many opinions say that the economy is showing signs of recovery after "bottoming out" in the second quarter of 2023. Therefore, GDP in the third quarter of 2023 is forecast to far exceed the previous quarter's increase of 4.14%.

One of the reasons why economic growth in the third quarter of 2023 is positive again is because the economies of some countries around the world have had more positive changes than previous forecasts when many economies were not stable. fell into negative growth.


Specifically, GDP growth in the first quarter and second quarter of 2023 compared to the same period last year of some economies are respectively: the US increased by 1.8% and 2.6%; European region increased by 1.1% and 0.6% (not negative as previously forecast); China increased by 4.5% and 6.3%; India increased by 6.1% and 7.8%; Japan increased by 2% in both quarters; Singapore increased by 0.4% and 0.5%; Thailand increased by 2.6% and 1.8%; Indonesia increased by 5.0% and 5.2%...

This positive economic development has created a basis for improving indicators of consumer confidence and business confidence. Consumption in many economies such as Japan, and the US... has improved, and consumer confidence has been continuously strengthened in recent months.

The Business Confidence Index (BCI) of businesses globally has also now reached its highest level since the end of 2022, reflecting strong optimism about business activities in 2023.

In particular, this index is currently at a high level in many economies globally, such as in China, the BCI index in August 2023 reached 49.7 points, 0.6 points higher than the previous month; India reached 132 points, 6 points higher; America 47.6 points, 1.2 points higher; Luxembourg 92.8 points, 12.2 points higher; Czech Republic 93.9 points, 2.8 points higher; Brazil 53.2 points, 2.1 points higher...

An increase in the BCI index immediately affected Vietnam's export growth in July and August 2023. According to the General Statistics Office, exports in August 2023 reached 32.37 billion USD, up 7.7% over the previous month (although still down 7.6% over the same period). Previously, exports in July 2023 were also 4.4% compared to June 2023 (down 9.9% over the same period).

Along with the recovery of world demand, domestic consumer demand also grew strongly. In the first eight months of 2023, total retail sales of consumer goods and services at current prices are estimated to reach VND 4,043.9 trillion, up 10% over the same period last year.

In the increase in total retail sales of goods in the first 8 months of this year, there were positive contributions from retail sales of goods, accommodation and dining, and travel and tourism. Of which, retail revenue of goods in the first 8 months of 2023 is estimated to reach 3,175.5 trillion VND, accounting for 78.5% of the total and increasing 8.7% over the same period last year (excluding the price increase factor of 7, 4%). Revenue from accommodation and food services in the first 8 months of 2023 is estimated to reach 436.3 trillion VND, accounting for 10.8% of the total and increasing by 15.6%.

In particular, tourism revenue in the first 8 months of 2023 is estimated to reach 22.4 trillion VND, accounting for 0.6% of the total and up 47% over the same period last year due to increased tourism demand during the peak season. and localities have also actively implemented many activities to stimulate tourism demand after a long period of being affected by the COVID-19 epidemic.

Vietnam's economic update reports published by international financial institutions in August 2023 show that after facing difficulties in the first half of the year, the economy in the third quarter of 2023 will recover and accelerate in the coming months. 4th quarter of 2023.

Vietnam's economic prospects up to this point are still assessed positively with GDP growth this year is expected to be over 5%.
Vietnam's economic prospects up to this point are still assessed positively with GDP growth this year is expected to be over 5%.

Accordingly, the Report published by PwC Vietnam's Economic and Market Research Group in mid-August 2023 stated that Vietnam's economic prospects up to this point are still assessed positively with GDP growth this year is expected to be over 5%.


HSBC Bank also forecasts Vietnam's GDP growth in 2023 to reach 5%, significantly higher than the forecast growth rate given by this bank for Indonesia (4.6%), and Malaysia (4.3%). ), Singapore (1.8%) or Thailand (3.7%)…

In particular, in the August 2023 Review Report of the World Bank (WB) in Vietnam, the WB forecasts that the economy this year will grow at 4.7%, then gradually recover to 5.0%. 5% and 6% in 2024 and 2025.

Although Vietnam's growth forecast is considered quite positive, in the face of difficulties in the global economy, international financial institutions have adjusted Vietnam's growth forecast this year, down from previous forecasts. “The reason is because the global economy is still unstable. The driving forces for global economic recovery are not clear. Furthermore, the drag from tighter monetary policy is increasingly evident, especially in activities with more sensitive interest rate factors such as business and housing investment, including construction. WB report commented.

Even in the June 2023 Economic Outlook Report, the Organization for Economic Cooperation and Development (OECD) also stated that, although there have been signs of improvement, the global economic outlook is still weak. and persistent inflation amid serious risks. Global economic growth in 2023 is forecast to reach 2.7%, the lowest rate since the global financial crisis in 2008. Along with many countries having raised interest rates and measures By suppressing inflation, economic recovery, and development will slow down, demand from the world economy will decline, consumer demand for non-essential goods will also decline, and international trade activities will continue to decline. continue to decline in the second half of 2023.

Therefore, financial institutions all believe that with an open economy like Vietnam, we need to be careful with unfavorable developments in the world situation, because "Vietnam will face challenges due to trade." cause, contrary to stability in the Philippines and Thailand" (according to HSBC).

In this context, the WB recommends that the Vietnamese Government needs to promote public investment because this is a factor that Vietnam can proactively adjust to growth goals.

Vietnam's economic prospects up to this point are still assessed positively with GDP growth this year is expected to be over 5%.

According to WB calculations, the planned public investment budget, if fully implemented, will increase public investment to 7.1% of GDP in 2023 compared to the estimated 5.5% of GDP in 2022, Which contributes to total demand at 0.4% of GDP. The Government has planned to increase public investment by 38% (over the same period) for 2023 - equivalent to 1.6% of GDP (through the 2022-2023 Economic Recovery and Development Program). Implementation is being accelerated, as convention investment disbursement increased by 43.3% over the same period last year in the first half of 2023.

“Vietnam's economy is facing challenges from internal and external factors. To promote economic growth, the Government can support aggregate demand through effective public investment, thereby creating jobs and stimulating economic activity,” Ms. Carolyn Turk, WB Country Director for Vietnam said.


However, Vietnam's public investment has not yet met expectations, both in terms of progress and performance. Therefore, the WB recommends that to speed up project implementation, a practical solution is to separate site clearance/resettlement from investment projects, especially for large projects. Central ministries, branches, and provinces need to develop systematic and digitalized mechanisms to identify projects with high risks of delay and non-completion and streamline regulatory processes and procedures. modify or terminate the project.

To rationalize the fiscal relationship between levels of government, the World Bank recommends that the Government rebalance the public investment budget structure in the direction of partially shifting from the local level to the central level.

Accordingly, strengthen strategic and program-based budgeting, instead of individual project portfolios, through improved classification structures, organization, budget presentation, and better implementation of methods. public investment program to promote the implementation of policy directions (including regional development, green transformation, and resilience and adaptation to climate change.

In addition, limitations in mechanisms and institutions for inter-provincial and inter-regional projects... need to be removed based on a new capital-sharing and syndication mechanism that should be institutionalized based on the established formula. determine transparency and science, which integrates considerations on domestic and foreign financial mobilization.



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