Vietnam looks to market forces to boost growth

Dr. Nguyen Quoc Viet, Deputy Director of the Vietnam Institute for Economic and Policy Research

How do you assess Vietnam's economic growth in 2022?

Vietnam's economy recovered faster than that of other countries in the region, notably Asian countries in comparable circumstances. We expect to achieve or exceed 14 of the 15 socioeconomic development goals set by the Government and the National Assembly for 2022, conclusive proof of Vietnam's successful post-pandemic recovery.

Vietnam achieved international affairs accomplishments in addition to economic growth successes in 2022. This is demonstrated not only by the massive inflow of foreign direct investment (FDI), but also by the country's performance in the global value chain. Various farm products have been exported via official trade channels to major markets with high standards, raising the value of the country's exports.

According to the General Statistics Office of Vietnam, the eleven-month export value has already topped 2021, and the trade surplus has exceeded US$10 billion. This demonstrates how swiftly Vietnam is reaping the benefits of its free trade agreements (FTAs). Exports significantly contributed to Vietnam's economic growth in 2022, laying the ground for further growth in 2023.

However, in 2022, the Vietnamese economy still faced numerous obstacles that must be addressed. Specifically, disbursement of public investment was still slow and economic growth stimulus packages did not achieve the expected results. If these two elements could have been improved, Vietnam's economic development in 2022 would have been significantly greater.

How do you assess the 2023 growth prospects?

As stated, Vietnam's gross domestic product (GDP) growth in 2022 has achieved several successes, but we should not be overly hopeful because the economy may face many hurdles in the future. Despite global inflation having peaked and exchange values and interest rates stabilizing, 2023 will continue to experience many fluctuations. Countries around the world will need to control inflation and cut spending to meet their own targets, potentially harming Vietnam's export and economic growth in 2023.

In addition, global economic instability during the COVID-19 outbreak and subsequent international conflicts is still present and will affect the world economy. All of these could undermine the National Assembly's 6.5 percent GDP growth goal for 2023.

In addition to export growth, Vietnam must also focus on expanding its domestic market

What forces will drive Vietnam’s 2023 growth, in your opinion?

People and businesses will drive Vietnam's GDP growth in 2023. To foster this dynamic, Vietnam must improve the investment and business environment, as well as mechanisms and regulations to increase institutional quality and market efficiency, and reduce risks to business activities.

When businesses grow, they create new jobs and raise salaries, which stimulates consumer demand and develops the domestic market, especially the service industry. This is the true driving force for development.

Furthermore, the rising international economic activity and international economic integration through global value chains are viewed as driving elements for Vietnam's economic growth in 2023. Businesses should be more proactive in all stages from production to technology, enhancing value-added content and contributing positively to total export value in 2023.