Measures needed to bolster Vietnam’s economic engines

There are seven localities with double-digit growth, namely Bac Giang, Khanh Hoa, Thanh Hoa, Ha Nam, Hai Phong, Tra Vinh and Hai Duong. Hai Phong is the only centrally-governed city among the fastest-growing localities.

It is notable that the fastest-growing provinces and cities in the first six months of 2024 saw a significant contribution from the manufacturing sector. In the meantime, localities which were once Vietnam’s economic engines, such as Ho Chi Minh City, Hanoi, Da Nang and Can Tho, all underperformed, with their growth coming below or equal to the country’s average.

There are many reasons behind the deceleration of such provinces and cities. In Da Nang, tourism activities have been greatly affected by the global economic downturn, which has reduced the number of international visitors and their spending. Tourism enterprises are still facing difficulties concerning capital and land rent to upgrade their tourism products or invest in new products. Enterprises’ production and business activities still face difficulties due to reductions in orders.

In Ho Chi Minh City, growth in total social investment is low, the economy’s capital absorption capacity is limited, enterprises’ profits have fallen, and their operations are expected to continue to be impacted by global economic difficulties. Furthermore, exports revenue has dropped, public investment disbursement is slow, the property sector’s recovery is not strong enough to contribute to the services sector’s growth, and consumption demand has not recovered to pre-pandemic levels.

As the economy continues to rebound in many sectors and the growth of localities is accelerating, the slowdown of economic engines should be taken seriously so that appropriate measures can be taken to return these localities to the orbit of high growth.

For the whole economy to record a high growth rate, in addition to boosting aggregate demand, it is necessary to promote public investment disbursement and new growth drivers.

Among the measures for the remainder of the year, the Government has asked ministries and localities to aggressively improve the business climate to help attract and utilise investment capital effectively and promote the growth of economic engines, including Hanoi, Can Tho, Da Nang and Ho Chi Minh City.