HCMC economy faces global headwinds

After bringing the Covid-19 pandemic under control at the end of last year, the city had aimed to "regain what was lost" this year before accelerating economic development next year and achieving the goals set for 2021-26.

Speaking at a meeting to review socio-economic development so far this year and discuss prospects for the next two months, chairman Phan Van Mai said: "Given the situation within and outside, it will be difficult to speed up in 2023 and will be satisfactory if the city can maintain this year’s growth rate."

The city economy grew by 9.97% in the first 10 months and full-year growth is expected to be 9.44% as against the target of 6-6.5%.

Vice chairman Vo Van Hoan said the city's economy has already accelerated and reached the limit, and it would be acceptable for the city to achieve growth of 9.4% or slightly more next year instead of continuing to speed up its economic growth since it has no conditions to do so.

While the city has achieved its revenue target this year, its public investment has been low at just 29% of the plan.

In the first 10 months, the city collected VND392.79 trillion ($15.79 billion) of budget revenue, meeting more than 101% of the target and increasing by 22% over the same period last year.

It ranked first in the country in the number of newly established companies, 37,402 with total registered capital of nearly VND405 trillion, but also in the number shut permanently or temporarily, which accounted for 30% of the national figure.

Tran Du Lich, a member of the National Financial and Monetary Policy Advisory Council, said at the meeting that HCMC has been "unlucky" to face a slew of major problems.

All forecasts now say the global economy would face difficulties from the fourth quarter onwards, and the recessionary trend is relatively clear, he said.

Inflation continues and the U.S. would continue to raise interest rates, pushing the world economy into stagnation, he said.

Truong Minh Huy Vu, deputy head of the Economic Advisory Group of HCMC, said the city faces pressures from both outside due to the global context and within after a series of economic crimes have roiled the market.

He said investigations launched into large companies have had an impact on the market as have the increase in deposit interest rate caps and declining foreign exchange reserves as the central bank sells dollars to keep the dong steady.

Lich said discipline in the financial and property markets nationwide is a good policy in the medium and long terms, but in the short term, it might affect the market as investors have the tendency to sit on their money.

If investment flows slow down in just the last two quarters of the year it would affect economic growth not just in 2023 but also 2024, he warned.

Many other issues also arose in October, including a shortage of fuel and a run on the Saigon Joint Stock Commercial Bank (SCB), which had to be placed under special control to ensure normal operations.

Bui Ta Hoang Vu, director of the city Department of Industry and Trade, flagged another problem at the meeting, saying HCMC is having difficulties with exports, especially its textile-garment industry, as many countries have been hit by inflation and slashed orders.

Concluding the meeting, Mai said with the expected fourth-quarter economic slump, the 2023 revenue target of VND469 trillion set for the city by the National Assembly would be challenging.