At the press conference of the Asian Development Bank (ADB) on the morning of September 27, Mr. Shantanu Chakraborty, Country Director of ADB in Vietnam assessed 2023 as a challenging year for the Vietnamese economy. Weak external demand, coupled with China's slow recovery, has affected the growth of export-oriented manufacturing industries. However, the economy remains resilient thanks to strong domestic consumption supported by moderate inflation.
ADB has adjusted Vietnam's GDP growth forecast for 2023 to 5.8%, compared to the previous 6.5%, reflecting weaker global demand than before.
Growth in 2024 is forecast to reach 6% as the economy continues to be affected by the global economic recession, monetary tightening in major economies and continued geopolitical instability. Inflation is also forecast to see a decrease, to 3.8% in 2023 and 4% in 2024.
Regarding risks to the economy in the coming time, the ADB representative mentioned the significant decline in the global economy and interest rates remaining at high levels in the US and Europe - the main trading partners of Vietnam. In addition, the rising momentum of the USD may create even greater challenges for the Vietnamese economy.
Forecasting imports and exports, ADB believes that weakening world demand will negatively impact the trade outlook in the remaining months of 2023 and 2024. However, exports in August 2023 have shown signs of recovery with an increase of 7.7% over the previous month.
Import-export growth is expected to return to a modest 5.0% this year and next. This year's current account surplus is estimated at about 3% of GDP. When production activities recover and imports of raw materials for production increase, the current account balance is expected to decrease to 2% of GDP in 2024.
Other sectors are forecast to have a good recovery. Services are expected to continue to grow, thanks to the revival of tourism and related services. In August, retail sales increased by 7.6% over the same period last year, helping sales in the first 8 months of 2023 increase by 10% over the same period. In addition, agriculture will benefit from rising food prices and the sector is forecast to grow by 3.2% in 2023.
Responding to the issue of the recent increase in exchange rates, Mr. Nguyen Ba Hung, chief economist of ADB, assessed that the State Bank is operating flexibly, expanding the amplitude, and exchange rate fluctuations are within the pre-set amplitude. Therefore, the State Bank has not encountered any policy difficulties with exchange rates.
Mr. Hung assessed that in the current context, interest rate reduction is only one factor affecting foreign currency supply and demand. People want to keep USD instead of VND because of low interest rates, causing demand for foreign currency to increase. However, exports have not improved much, so they have not caused too large fluctuations in demand. The recent fluctuations in the exchange rate are related to the information that the State Bank of Vietnam has re-issued bills to reduce liquidity and it will take a short time to stabilize again.
Compiled by VietnamCredit