Two scenarios for GDP growth this year: planning ministry

By Phuong Dung   April 3, 2024 | 06:37 pm PT
Two scenarios for GDP growth this year: planning ministry
Minister of Planning and Investment Nguyen Chi Dung speaking at the government meeting on April 3, 2024. Photo by VGP
The Ministry of Planning and Investment has said what needs to be done from here on to achieve GDP growth of 6% and 6.5%, the target range for 2024.

For 6% growth, the economy needs to expand by 5.85%, 6.22% and 6.28% in the second, third and fourth quarters, Minister of Planning and Investment Nguyen Chi Dung said at a government meeting Wednesday.

For 6.5%, they have to go up to 6.32%, 6.79% and 7.08%, he said.

The scenarios are predicated on the first-quarter growth of 5.66%, the highest rate since 2020, and a steady inflation rate of 3.77%, he explained.

While his ministry leans toward the latter scenario, it acknowledges that the economy still faces certain problems and challenges, he said.

Consumption demand grew at a slower pace than in the first quarter in 2023 and 2011-19 [before Covid], he said.

This lack of demand and high competition are the biggest challenges for manufacturing businesses this year, he said.

According to a ministry report, nearly 74,000 businesses have exit the market in the first quarter, a 23% increase year-on-year, most of them small and medium-sized enterprises.

The numbers that have temporarily shut shop and are awaiting dissolution have risen by 24.5% and 18.4%.

The aviation industry is dealing with an aircraft shortage, resulting in lower flight frequencies on many domestic routes, Dung said.

This has led to a surge in airfares, affecting tourism.

Bank lending interest rates have decreased, but businesses still find it difficult to access credit, the minister said.

The non-performing loans ratio was 4.79% by the end of January, more than double the 2.03% rate at the end of 2022, resulting in higher costs for the banking system.

The cyberattack on brokerage VNDirect Securities last month had a significant impact on investor sentiment, the ministry said.

It could also jeopardize the chances of the Vietnamese stock market to be upgraded from Frontier to Emerging in the FTSE Russell global classification, it added.

Prime Minister Pham Minh Chinh instructed the State Bank of Vietnam to ensure sufficient capital flows into the economy, closely monitor bad debts, further reduce lending interest rates, and have measures in place to keep exchange rates and gold prices steady.

He said the Ministry of Finance should mitigate the increasing risk of cyberattacks and get the stock market upgraded at the earliest.

Local governments need to make their best efforts to help the economy achieve the 6.5% growth target, he added.

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