HCMC growth set at 7% in best scenario

By Vien Thong June 30, 2023 | 12:12 am PT

Ben Thanh Market in Ho Chi Minh City. Photo by VnExpress/Quynh Tran

Ho Chi Minh City’s GRDP growth is expected to be nearly 7% this year, even under the most favorable conditions, as many economic difficulties linger, its chairman Phan Van Mai has said.

Vietnam’s biggest city recorded a 3.55% GRDP growth in the first six months with public investment and services being the main driver, Mai said at a meeting Thursday.

The city disbursed over VND14 trillion ($593.62 million) in public investment, up 2.3 times year-on-year.

Economist Tran Du Lich said that the economy hit its bottom in the first quarter with a 0.7% growth rate, but rebounded strongly in the second quarter with a 5.87% expansion.

Industry grew by 2.59%, which was higher than the country’s rate of 0.44%.

But analysts are concerned that HCMC will face obstacles in reaching its growth target of 7.5-8% this year.

Le Thi Huynh Mai, director of the city’s Department of Planning and Investment, said that global economic uncertainties and tightened monetary policy from major economies would have an impact on the city, which is already facing challenges from the country’s ailing property sector.

Lich forecast that in the second half the city might record an 8% growth but that will not be enough to compensate for the low rate recorded in the first six months.

"The city had earlier eyed 2023 to be a year of sped up recovery, but that might have to be next year," Lich said.

Businesses in the city continue to report challenges.

Nguyen Phuoc Hung, deputy chairman of the HCMC Business Association, said that exports companies are seeing a shortage of 30-50% in orders.

Footwear and garment companies have their revenues plunged by 30-50% year-on-year while wood and furniture companies post a 30% decline.

A survey by the association shows that 95% of its members are reporting losses and high unsold inventory.

Businesses need capital due to a disrupted cashflow, he said, adding that bureaucracy also slowed down companies’ recovery.

The HCMC Institute for Development Studies had proposed further public spending to boost the economy.

Promotions should be issued to increase spending, it said.

The HCMC Business Association proposed that the 2% VAT rebate be extended throughout 2024 instead of applying to this year only.

Mai said that the city was still working to reduce bureaucracy.