The downgrade was stated by Rong Viet Securities (VDSC) in the recently published macro report. In the first quarter of the year, GDP growth was only 3.3%. If the time when the economy was negatively impacted by COVID-19 (the first quarter of 2020 and the third quarter of 2021) were not considered, this is the lowest growth rate for the first quarter since 2009.
Currently, the Ministry of Planning and Investment still maintains their forecast for GDP growth for the whole year at 6.5% with a growth target of 6.7-7.9% in the remaining quarters.
VDSC believes that this goal is not only challenging but also not feasible in the context that the world economy is on the edge of recession and the decline of the real estate market and domestic consumption is only in the early stages.
In addition, effects of China opening up and recovering are not as positive as expected.
VDSC's forecast at the beginning of the year for GDP growth for the whole year 2023 is 5.6%. With low economic growth in the first quarter, VDSChas revised down its forecast of GDP growth for the whole year to 5%.
This forecast is based on industrial production improving in the coming quarters, business and consumer confidence recovering from the second half of 2023 thanks to easing monetary policy to support growth, and public investment in the coming quarters expected to accelerate faster than in the first quarter and grow by about 20% over the same period.
The assumption for the above forecast is that the global economic growth will only slow down at an average rate, the interest rate and inflation will cool down, which will boost credit and consumption demand and the Government's fiscal and monetary support policy will soon be implemented.
The report also said that from a usage perspective, the economic growth picture has deteriorated significantly. In particular, final consumption increased only 3%, equivalent to the increase in the first quarter of 2020 and significantly lower than the average increase in non-epidemic periods.
Investment in accumulating assets barely grew in the first quarter while the import and export picture weakened significantly, which is foreshadowed by the trade growth data.
The impact of the drop in external demand on Vietnam is also evident in the GRDP growth of some provinces with large industrial production scale and FDI concentration such as Bac Ninh (-11.85% yoy), Quang Nam (-10.88% yoy), Binh Duong (+1.15% yoy) and Dong Nai (+3.25% yoy).
However, some provinces still recorded better GRDP growth such as Thai Nguyen (+6.53% y/y), Bac Giang (+8.4% y/y) and Hai Phong (+9.65% yoy).
Meanwhile, Ho Chi Minh City, which is the main driver of economic growth of the country, shows a less positive picture when its GRDP growth in the first quarter was only 0.7%, of which the construction and real estate sectors decreased 19% and 16% respectively over the same period, consumer retail which accounts for more than 18% of the city's GRDP structure increased only 3.8%.
The above developments show that all growth drivers seem to be weakening significantly, partly due to the decline of the FDI and export sectors, but also due to internal drivers such as consumption and investment.
Source: vietnambiz
Compiled by VietnamCredit
