Q1 economic growth drivers

Opportunities and challenges

According to the Ministry of Planning and Investment (MPI), by the end of January 2023, the Vietnamese economy continued to show positive signs with the macroeconomic situation remaining stable. Specifically, the consumer price index (CPI) grew 0.52 percent compared with December 2022 and 4.89 percent year-on-year; in the monetary market, credit grew 0.65 percent by January 17 compared with the end of 2022; the banking system’s liquidity was ensured.

In January, State budget revenue reached 11.3 percent of yearly projection, foreign direct investment reached US$1.2 billion, triple the result of January 2022, and trade surplus was estimated at US$3.6 billion.

Production and trade continued recovering thanks to high consumer demand during the Lunar New Year holiday (late January). Agricultural production remains stable. Total retail sales of consumer goods and services grew 20 percent year-on-year. The supply of goods is abundant with almost no major price changes.

However, due to the week-long Lunar New Year holiday and the impact of the global economic uncertainty, industrial production and import-export activities faced numerous difficulties. The January index of industrial production (IIP) equaled 92 percent of that in January 2022, while total foreign trade value was lower compared with December and January 2022.

Total retail sales of consumer goods and services in January 2023 grew 20 percent year-on-year

Three growth drivers

According to the MPI, given the increasing difficulties challenging Vietnam’s efforts to control inflation and maintain macroeconomic stability, Vietnam should focus on promoting investment, domestic consumption and foreign trade.

To promote investment, the prime minister has ordered the acceleration of major national projects and the improvement of the investment and business environment to create a new space for socioeconomic development. At the same time, the Government has applied fiscal policies to provide businesses with support, helping them reduce input costs and output prices in order to control inflation. Appropriate monetary policies are helping manage credit and keeping interest at a reasonable level to facilitate investment in production and trade. The disbursement of public investment capital will also be accelerated.

To promote domestic consumption and foreign trade, the industry and trade sector will facilitate business access to capital and credit, and strengthen domestic purchasing power through effective implementation of trade promotion programs. The distribution of goods on digital platforms and e-commerce will be expanded to boost domestic sales.

At the same time, the Ministry of Industry and Trade will accelerate negotiations on bilateral and multilateral cooperation mechanisms, bring into play the role of overseas Vietnamese trade offices, and support localities, associations and businesses in taking advantage of free trade agreements to increase exports. Technical barriers will be removed to facilitate business access to new markets.

Digital transformation in the field of trade promotion will be accelerated to connect supply and demand, as well as to build and develop Vietnamese brands in foreign markets. Attention will also be paid to logistics services, e-commerce, and especially cross-border trade.