If the situation continues like this, which it seems it will, then the risk of global economic recession will be unavoidable due to war, polarization, division, blockade, economic embargo, and boycott of goods and services... Economic analysis site responsiblestatecraft.org said on May 24 that 29% of the global economy and 47% of the world's oil reserves are embargoed.
It seems that few people make negative predictions like this, especially in the West when they are adding fuel to the fire in Ukraine, but in economic management or corporate governance scenarios, it should probably be taken into account—even the worst scenarios to be able to proactively respond once they happen.
According to newly released data from the General Statistics Office, Vietnam's GDP growth rate in the second quarter was higher than the first quarter, but the Vietnamese economy is still facing many challenges. Accordingly, in the first 6 months of 2023, GDP increased by an average of 3.72% over the same period. This is a record low for the years 2011-2023, except for 2020 - the year of the Covid-19 pandemic. Notably, the 6-month growth of the manufacturing sector almost stagnated at 0.37% over the same period last year and the shortage of export orders is still common in many manufacturing industries. Some industries such as garments, leather and leather products, and wood processing continued to have negative growth in the Industrial Production Index (IIP) in June, leading to the total export value in June still decreasing by 11.4% compared to the previous month. same period. Some industry groups that have maintained positive growth from the beginning of the year until now are gradually narrowing their growth momentum. In addition, in the first half of June, Northern businesses are facing additional electricity shortages, causing difficulties and great damage to both manufacturing factories and service businesses.
Statistics show that the current stability is not sustainable, even though the second quarter shows signs of being better than the first quarter, it is possible that some of the State's operating and economic support policies will gradually take effect, especially through public investment spending, stimulus packages, three national target programs, reducing loan interest rates, reducing VAT by 2%, reducing registration tax for domestically produced cars, solving problems in the corporate bond market, real estate market... However, the unsustainability of temporary stability may lie in several factors such as import and export, attracting foreign investment, forcing to balance the State budget when revenues decrease, spending requirements increase and there is potential inflation.
Indeed, according to data from Vietdata, Vietnam's exports in the first 6 months of 2023 decreased the most over the same period in wood and wood products 28.8%, followed by seafood 27.4%, phones and components 17.9%, garments and fibers 16.8% iron and steel 17.2%, shoes and bags 14.4%, electronics, computers, components 9.3%... the only increase was agricultural products and vegetables 19.2% is currently a bright spot but the value only reached 10.17 billion USD out of the total export turnover of 6 months of 164.5 billion USD, down 12.1% over the same period last year, of which the proportion was Export of the FDI sector is 73.1%. In the first 6 months of 2023, export value to most major markets still decreased sharply, with the United States alone decreasing by 22.5%, Korea by 10.4%, Japan by 10.4%, and the EU by 9.9%. %, ASEAN 8.4%... With an open, export-oriented economy, the trend of narrowing the market and export value is a very worrying factor.
Vietdata forecasts that Vietnam's export outlook for the last 6 months of 2023 may be more positive than the first 6 months but it is unlikely to make a breakthrough. The total import demand figures of the EU, China, US, Japan, and Korean markets show no signs or ability to accelerate.
The channel to attract foreign direct investment (FDI) also shows that it is generally still slow compared to the same period in the context of many difficulties in the global economy. Specifically, accumulated in the first 6 months of 2023, disbursed capital almost went sideways while registered capital, excluding foreign indirect investment (FII), decreased nearly 20% over the same period. In the future, the application of the global minimum tax rate is expected to affect the policy of attracting foreign investment in Vietnam.
Reporting to the National Assembly at the recent 5th session [1], the Government assessed the increasing pressure on macroeconomic management; Production, business, and investment face many difficulties that will likely impact state budget revenue, creating pressure on fiscal policy management; Managing monetary policy may be more difficult in the context of complicated and difficult to forecast US and EU monetary policies while simultaneously controlling inflation and striving to reduce interest rates to support economic production. business, ensuring the safety of the system of credit institutions...
In the last months of the year, maintaining macroeconomic stability, controlling inflation, promoting growth, and ensuring major balances of the economy are still the Government's overall priorities. In addition, continue to strengthen the adaptive and resilient capacity of the financial and banking system. Continue to closely monitor international, regional, and domestic developments and situations to promptly forecast and develop response scenarios and timely policy responses appropriate to arising issues. Synchronously and harmoniously manage fiscal policy, monetary policy, and other policies to remove difficulties for markets and create conditions for businesses to access capital sources to serve production and business activities. , creating motivation for socio-economic development.
The business community believes in the State's mechanisms and policies, and the Government's economic direction and management. At the same time, it should have its own calculations and plans appropriate to the actual conditions and prospects. developments of orders, markets, and corporate finances based on forecasts, analysis, and our own practical experience through many hardships.
[1] Government Report No. 232/BC-CP dated May 17, 2023, sent to the National Assembly on additional assessment of the results of implementing the 2022 Socio-Economic Development Plan; implementation of the 2023 Socio-Economic Development Plan.
Article: Dr. Tran Van, Former Deputy Chairman of the Finance and Budget Committee of the National Assembly