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Unfavorable factors affecting Vietnam's growth in 2023

Unfavorable factors affecting Vietnam's growth in 2023

Friday 23, 06 2023
Weakening external demand, coupled with a shortage of electricity for consumption and production, as well as possible pressure on capital flows and exchange rates are factors affecting growth that Vietnam should be aware of, according to the World Bank.

A slowdown in industrial production

According to the World Bank in its latest Vietnam macroeconomic update, external demand continues to be weak and global uncertainties are having an adverse impact on the economy, leading to a contraction in exports and imports, and a slowdown in industrial production.

Vietnamcredit the World Bank

While domestic consumption (as reflected in retail sales) remains solid and comparable to pre-pandemic growth, credit growth has continued to slow, reflecting weak credit demand.

In the event that global financial conditions tighten, external demand may weaken further, the World Bank warned.

Besides, the Northern region began to witness a huge shortage of electricity for consumption and production at the end of May. Accordingly, if this problem is not resolved in time, it may affect the economy.

Solutions

When inflation showed signs of slowing down, the State Bank loosened monetary policies to support the economy. However, according to the World Bank, the monetary policy regulator will need to closely monitor the difference in the trend of Vietnam's monetary policy management compared to that of other countries - which could create pressure on capital flows and exchange rates.

Vietnamcredit the State Bank

This organization recommends that accelerating the disbursement of public investment capital (including national target programs) will support demand and economic growth in the short term.

At the same time, prioritizing investments in digital and green technologies, infrastructure, and human resources will help promote long-term sustainable development.

In addition, while manufacturing exports slow, and manufacturing jobs suffer, it is important for Vietnam to quickly identify and support these workers and affected families through the social protection system.

Besides, streamlining administrative procedures and removing regulatory barriers will help promote business activities and investments necessary for economic growth.

In the concluding document on major tasks and solutions to stabilize the macro-economy, the Government Standing Committee requested the Ministry of Planning and Investment to continue strongly promoting disbursement of public investment capital; urgently review obstacles and difficulties in legal and administrative procedures to propose amendments in the direction of increasing decentralization of powers for localities.

Vietnamredit the Government Standing Committee

Along with that, review and cut business conditions, especially for FDI enterprises and projects, and small & medium enterprises.

The Government Standing Committee also requested the Ministry of Industry and Trade to perform well the role of state management, to have specific programs, plans and measures to ensure enough electricity for production and consumption.

On top of that, the Government Standing Committee has requested the Ministry of Finance to quickly implement VAT refund for businesses, ensuring simple, fast and convenient procedures.

Source: theleader

Compiled by VietnamCredit

Tag: Vietnam business environment; economic growth; external risk; shortage of electricity

 

Categories
Vietnam Economy

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