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NA Economic Committee sees lower-than-expected GDP growth this year

The Saigon Times

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HCMC – The National Assembly (NA) Economic Committee has revised down its GDP growth forecast for 2023 to slightly above 5% from the target of 6.5% earlier approved by the NA.

Vu Hong Thanh, chairman of the Economic Committee, said that 10 out of the 15 economic indicators either met or exceeded their targets. However, the remaining five indicators failed to reach their goals for the year. This suggests a deceleration in economic recovery, despite some positive trends.

Thanh made these remarks during the 27th session of the Standing Committee of the National Assembly today, October 16.

Last month, the Ministry of Planning and Investment had already cautioned that achieving GDP growth of over 6% this year would be challenging.

The ministry outlined three potential scenarios for 2023. The least optimistic scenario required a 7% GDP increase in the fourth quarter to attain a full-year GDP growth of 5%, while the most optimistic scenario necessitated a substantial fourth-quarter GDP increase of 10.6%, significantly higher than the third quarter’s 5.33% growth, to reach GDP growth of 6%.

Exports, a pivotal driver of growth, are projected to decrease this year. Data from the General Statistics Office showed an 8.2% year-on-year decline in exports during the first nine months. Private investment witnessed a modest 2.3% increase, well below pre-pandemic levels.

The manufacturing and processing sectors also experienced sluggish growth, with the Index of Industrial Production for January-September growing by just 0.2% compared to the same period last year.

Thanh highlighted administrative obstacles, market access issues, and rising production and logistics costs as challenges for the business community. These factors have contributed to over 135,000 business closures this year.

The number of newly established businesses declined by 14.6% in registrations and 1.2% in the labor force, indicating not only a decrease in the number of businesses being formed but also that those newly established are hiring fewer employees compared to the past. As of September 1, the number of employees working in industrial enterprises was 1.9% lower than in the same period last year.

The disbursement of public investment stood at 51.4% at the end of September, falling below expectations, with 17 central agencies reporting disbursement rates below 10%.

Despite the ongoing challenges, the Economic Committee foresees an economic growth rebound in 2024-2025. However, achieving the average growth rate target of 6.5-7% for 2021-2025 remains a formidable task.

The committee has also urged the Government to reassess the feasibility of its 2024 GDP growth target of 6-6.5% and its per capita income goal of US$4,700-4,730.

The committee recommended accelerating investment in transportation infrastructure, coping with bottlenecks in the bond, real estate, and stock markets, and extending tax and fee support policies to foster a more sustainable economic recovery.

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