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CIEM: Update 3 growth scenarios for the whole year 2023

The scene of the workshop

Speaking at the conference to announce the Report "Vietnam's economy in the first 6 months and prospects for the end of 2023" organized by CIEM, Dr. Tran Thi Hong Minh, Director of the CIEM Institute said, being a growing economy in a dynamically developing Asia-Pacific region, the economic growth is always an important goal for Vietnam government. Despitemaintaining macroeconomic stability and social security are indispensable foundations, Vietnam still have to strive to fulfill the set goals, including promoting quality economic growth and sustainability.

In order to fulfill this target, Vietnam has been looking directly at the difficult problems of the economy, effectively explaining related contents such as economic growth results in the first 6 months, economic growth or inflation orientation development or both... Looking to the future, Vietnam also recognizes the need to create motivation from innovation, from improving labor productivity and from new economic models”, emphasized the Director of the CIEM Institute.

Although there is still a distance from the set target, Vietnam's economic growth rate has recorded an improvement, which recorded an achievement of 3.28% in the first quarter and of 4.14%, in the second quarter, and of 3.72%. in the first six months of this year. "More importantly, the Vietnamese economy has initially made dual transformation efforts, combining digital transformation and green transformation to create new impetus for economic recovery and growth model renewal...", emphasized Director of CIEM. On that basis, CIEM has updated and forecasted 3 scenarios for economic growth in the 6- end months.

Accordingly, in scenario 1, world economic factors keep consistent with assessments of international organizations and Vietnam maintains policy efforts similar to those in the second half of 2021- 2022. GDP growth is likely to reach 5.34% in 2023; in which exports for the whole year are forecasted to down at 5.64% and the average CPI will increase by 3.43%. Trade balance is likely to reach a surplus at $9.1 billion.

Scenario 2, keeping most of the assumptions in scenario 1 about world economic factors, but with some more aggressive monetary and fiscal easing adjustments in Vietnam. Accordingly, CIEM expects GDP growth to be forecast at 5.72%, exports to decrease by 3.66% and average CPI to increase by 3.87%; the trade balance will reach a surplus of 10.3 billionUSD.

More optimistically, in scenario 3, CIEM assumes some more positive changes of the global economy (growth recovers, supply chain disruptions decrease significantly, US inflation decrease, more favorable climate…) and the drastic reform and administration in Vietnam. As a result, disbursement and absorption of public investment and credit achieved maximum results. In addition, the business environment and labor productivity continue to be facilitated. Investment activities are promoted and implemented in a more efficient direction. In this scenario, CIEM expects GDP growth to be 6.46% in 2023. Accordingly, the year's exports will only decrease by 2.17%, while the average CPIwill increase by 4.39%, and the trade balance will achieve a surplus at $6.8 billion.

Commenting on Vietnam's economic prospects in the last months of 2023, Nguyen Anh Duong, Head of the General Research Department (CIEM), said that Vietnam's economy could be influenced by many factors.

Firstly, the possibility of continuation and extent of monetary tightening in the major economies.

Second, the key economies will increase their strategic competition (both in terms of geopolitics, economics, and technology), but the trend of balancing cooperation in the direction of avoiding "choosing sides" will be more common in small and medium sized economies.

Third, the flow of foreign investment capital tends to shift in the context of the implement the Global Minimum Tax Mechanism. Fourth, the progress of implementation of tasks in the program of socio-economic recovery and development. Finally, Vietnam's capacity to harmonize and parallelize both digital and green transformation.