The GDP growth rate for the first quarter of 2024 is 5.66%, a figure considered quite impressive, kicking off a 2024 marked by ‘more challenges than opportunities’. This is also the highest GDP growth rate for the first quarter since the onset of the Covid-19 pandemic.
In particular, the manufacturing and processing industry grew by nearly 7%, contributing over 1.7% to GDP growth, which according to the Director-General of the General Statistics Office, Nguyen Thi Huong, is a high growth rate given the current economic uncertainties.
Another figure reflecting the recovery in the manufacturing and processing industry is the nearly 14% increase in imports compared to the same period in 2023, with raw material imports accounting for 94%. This reflects the relatively good recovery momentum of businesses, setting the stage for growth in the coming months.
Exports witnessed strong growth, especially in certain categories such as electronics, components, and textiles. The recovery in exports of these key categories is crucial for growth.
In the first three months of 2024, over 36 thousand new businesses were established nationwide, up nearly 7% compared to the same period. Additionally, around 9.7 thousand businesses increased their capital, and 23.6 thousand businesses resumed operations, indicating some return of confidence in the economy and business prospects.
However, over 53.4 thousand businesses temporarily suspended operations for a limited period, up 24.5% compared to the same period. The number of businesses completely withdrawing from the market also increased significantly to around 20.6 thousand.
In summary, the number of active businesses in the economy decreased by 14.1 thousand in the first quarter of 2024. This presents a paradox compared to the economic recovery picture.
From a different perspective, this paradox is not difficult to explain. The business community has been enduring profound and multidimensional impacts for the past four years, facing continuous challenges. Business internal resources have weakened, and confidence and hope have significantly eroded.
The Vietnamese economy can be likened to a recovering patient, where ‘exiting’ businesses can be seen as old cells, no longer resistant and thus being expelled from the body. This can be viewed as a natural law but also reflects the ‘shortcomings’ of the economy, akin to a newly recovered patient whose physical strength has not fully restored.
The "shortcomings" are also reflected in the credit growth rate, which only reached about 0.26% in the first three months. Normally, credit growth is low at the beginning of the year, but the figure of 0.26% can be considered unusually low and the lowest in the past 10 years.
Senior economic expert Pham Chi Lan, speaking at an investment event in March, commented that while the capital source for the economy is abundant, it is still very costly, much more expensive than neighboring countries, let alone developed ones.
"If access to capital resources were timely, many businesses might not have to make decisions to withdraw from the market," Ms. Lan said.
Just a few days later, while presiding over a conference on monetary policy implementation, Prime Minister Pham Minh Chinh also questioned why despite the increase in bank deposits, businesses still "cry out" for capital?
By the end of the first quarter of 2024, along with positive credit growth, capital mobilization by credit institutions decreased slightly by over 0.7%, indicating that the "excess money" problem is being addressed.
However, the level of improvement is too small, reflecting the economy's weak absorption capacity for capital.
In the context of countercyclical fiscal policies being implemented for a long time, the economy's weak capital absorption capacity indicates that the fiscal workforce is not at a high level. This may stem from the lack of confidence in the economic recovery prospects among economic entities, including businesses and consumers.
Old challenges remain, new difficulties arise, making it relatively difficult to restore business confidence. A survey by the Ministry of Planning and Investment shows that only about 22% of manufacturing and processing enterprises assessed the business situation in the first quarter of 2024 as better than the fourth quarter of 2023.
Over 45% of businesses expect the situation to be more favorable in the second quarter of 2024. This is a positive sign, showing that confidence has not hit rock bottom, thanks to achievements such as maintaining macroeconomic stability and maintaining positive growth in difficult circumstances.
However, as mentioned above, restoring confidence for economic entities at this time is not simple, requiring policy efforts to be more closely aligned with the practical situation of businesses.
Source: theleader
Compiled by VietnamCredit
