Vietnam should extend economic support programme to 2024: WB

Vietnam could consider extending the implementation of the economic support programme (2022-2023) into next year to allow its planned investments to be fully implemented, supporting aggregate demand, as the economy still faces headwinds, according to World Bank experts.

In its Vietnam Macro Monitoring report announced on December 18, the bank stressed that efforts to restore confidence and promote a healthy development of the real estate markets will be key to supporting economic stability in the short term and economic growth in the long term.

The report showed that cumulative FDI commitment for 11 months of 2023 continued to increase, reaching 28.8 billion USD, 14.8% higher than the same period in 2022, despite global uncertainties, reflecting investors’ confidence in Vietnam’s economic prospects. However, this is still about 10% lower than the pre-COVID-19 level in 2019. As of the end of November, FDI disbursement was 20.3 billion USD, 2.9% higher than a year ago, the report said.

The export and import of goods continued to improve in response to recovering external demand, increasing by 6.7% and 5.1% year-on-year, respectively.

The industrial production index grew by 2.7% month-on-month (m/m) in November, due to the increased production of key export products such as textile (4.4%, m/m) and electric equipment (7.9%, m/m). However, prospects remain subdued as Vietnam’s Purchasing Managers' Index (PMI) remained in the contractionary territory in November (47.3 – the lowest level since May 2023).

Consumer Price Index (CPI) inflation remain stable at 3.5% (y/y) in November, compared with 3.6% (y/y) in October, well below the target inflation of 4.5%.

The government budget revenue collection during the first 11 months of 2023 fell by 6.2% compared with same period of 2022, due to the slowdown in economic activities. Eleven-month cumulative public expenditure, on the other hand, accelerated by 10.6% (y/y), reflecting the government’s effort to support the slowing economy. Public investment disbursement during the first 11 months grew by 36.3% (y/y), but still only constituted 63.4% of the annual capital budget allocation approved by the National Assembly for 2023.