Demand recovery expected to drive GDP growth: Experts

It’s a big challenge for the economy to reach this year’s GDP growth target of 6.5%, and economic expansion is hoped to be boosted by some important demand factors in the second half of 2023, experts have said.

With an economic panorama not so bright in H1, a growth rate of 6.5% for this year is a highly challenging target, they told a macro-economic forum held by the Ho Chi Minh City University of Banking (HUB) on July 18.

Except for 2020 that was impacted by the COVID-19 pandemic, the GDP growth rates in the first and second quarters of 2023 were the lowest compared to the same periods of recent years. Growth was not positive in all sectors, especially industry and construction, an HUB research group pointed out.

Industrial production is facing a year full of difficulties due to falling consumption demand in many countries that are large trading partners of Vietnam as they have been tightening their monetary policy to curb inflation.

The industry and construction sector’s added value increased by a mere 0.44% in H1, the slowest H1 expansion since 2011, and contributed only 0.15 percentage point to the overall growth in the economy’s added value.

Given the strong decline in this sector, experts held that this is one of the main factors affecting Vietnam’s economic growth in H2.

HUB Rector Assoc. Prof. and Dr Nguyen Duc Trung said the H1 growth was only 3.72%, a 14-year low, so it is very difficult to achieve this year’s target of 6.5%.

Some growth hampering factors include the possibility of global economic recession, the monetary policies tightened to rein in inflation in developed countries, along with geopolitical tensions in some countries and their global influence. As a result, industrial production will continue enduring severe impacts, and the processing and manufacturing industry may lose its role as the biggest growth driver, he elaborated.

Basing on the H1 economic situation, the research group issued two growth scenarios for 2023. Accordingly, GDP may rise by 5.8 - 6.3% in the low-case scenario, or reach the Government-set target or even higher, 6.5 - 6.8%, in the positive one.

For his part, HUB Vice Rector Assoc. Prof. and Dr Nguyen Khac Quoc Bao perceived that despite numerous difficulties and challenges, this year’s economic growth will reach the target of 6.5% while inflation be within the cap of 4.5% as predicted by some state agencies.

At the forum, experts said the 2023 growth will be fueled by some important demand factors.

The recovery of consumption demand curbed during the pandemic-hit years has yet to show signs of stagnation despite less optimistic growth forecasts. Efforts to disburse public investment may help foster construction and related economic activities in H2. The monetary policy may be eased further to stimulate demand. Besides, the re-opening of the Chinese market is expected to help shore up global supply chains, as well as import and tourism demand from the world’s second largest economy, they explained.