{"id":76769,"date":"2024-04-19T16:58:00","date_gmt":"2024-04-19T09:58:00","guid":{"rendered":"https:\/\/neu.edu.vn\/focus-on-boosting-aggregate-demand-for-faster-economic-recovery-interview-participants-prof-dr-pham-hong-chuong-and-prof-dr-to-trung-thanh\/"},"modified":"2024-04-19T16:58:00","modified_gmt":"2024-04-19T09:58:00","slug":"focus-on-boosting-aggregate-demand-for-faster-economic-recovery-interview-participants-prof-dr-pham-hong-chuong-and-prof-dr-to-trung-thanh","status":"publish","type":"post","link":"https:\/\/neu.edu.vn\/en\/focus-on-boosting-aggregate-demand-for-faster-economic-recovery-interview-participants-prof-dr-pham-hong-chuong-and-prof-dr-to-trung-thanh\/","title":{"rendered":"Focus on Boosting Aggregate Demand for Faster Economic Recovery. Interview Participants: Prof. Dr. Pham Hong Chuong and Prof. Dr. To Trung Thanh"},"content":{"rendered":"
(TBTCO) – With no substantive improvement in the economic model, the Government will have to rely primarily on demand-side policies to achieve high growth as early as 2024. Growth drivers\u2014in investment, consumption, and exports\u2014need a further boost.<\/div>\n
\n

This assessment was presented at the national scientific conference and launch of the Vietnam Annual Economic Review 2023, themed \u201cVietnam\u2019s Economy in 2023 and Outlook for 2024: Boosting Aggregate Demand for Economic Growth in a New Context,\u201d organized by National Economics University (NEU) in collaboration with the Central Economic Commission and the National Assembly\u2019s Economic Committee on April 17.<\/p>\n\n\n\n\n
\"Focus<\/td>\n<\/tr>\n
Focus on boosting aggregate demand for faster economic recovery. The current value-added tax reduction policy has yielded positive results. File photo<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Declining Aggregate Demand Signals a Risk of Recession<\/h2>\n

According to Prof. Dr. Pham Hong Chuong, President of NEU, 2023 was one of the most difficult years for Vietnam\u2019s economy in recent years. Growth in 2023 remained far below pre-COVID-19 levels. Most notable were weakening aggregate demand and its key components, such as consumption and investment, alongside a lack of improvement in the quality of growth.<\/p>\n

\u201cDeclining aggregate demand indicates that the economy faces a risk of recession. This affects overall economic growth, causing consequences such as falling industrial production, rising unemployment, and lower household incomes and spending\u2026\u201d Prof. Dr. Pham Hong Chuong observed.<\/p>\n

Prof. Dr. To Trung Thanh analyzed the downward trend in aggregate demand and its economic impact in NEU\u2019s Vietnam Annual Economic Review 2023.<\/p>\n

According to the review, all components of Vietnam\u2019s aggregate demand showed signs of slower growth in 2023. Specifically, final consumption and capital formation grew by 3.52% and 4.09%, respectively, down sharply from 7.09% and 5.40% in 2022. Consequently, GDP growth in 2023 came primarily from the balance of exports and imports of goods and services at constant prices, with a smaller deficit than in the previous year.<\/p>\n\n\n\n\n
\"Focus<\/td>\n<\/tr>\n
Illustrative photo<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The trade balance shifted from a deficit in 2022 to a surplus in 2023. However, declining imports also indicate that production faces considerable difficulties, particularly in the next production cycle. In this situation, GDP growth may not truly reflect the \u201chealth\u201d of the economy, Prof. Dr. To Trung Thanh commented.<\/p>\n

Total realized investment across the economy in 2023 at current prices was estimated at VND 3,423.5 trillion, up 6.2% from 2022. Within this total, realized investment from the state budget rose 21.2% year over year. This resulted from efforts by the Government, ministries, sectors, and localities to decisively accelerate public investment implementation as a key driver of economic growth amid difficulties facing non-state sources of funding.<\/p>\n

Private Sector Still Faces Major Difficulties<\/h2>\n

Also in 2023, the state sector\u2019s share of investment rose to 27.85%, compared with 25.61% in 2022. Meanwhile, investment growth in the non-state sector remained very low compared with other sectors of the economy, at just 3.4%, whereas this sector recorded average growth of 15% before the pandemic, during 2016-2019.<\/p>\n

Specifically, private investment grew by only 2.7%, compared with 8.9% in 2022; foreign direct investment (FDI) grew by just 5.4%, compared with 13.9% in 2022. The non-state sector\u2019s share of investment fell from 58.2% in 2022 to 56.1% in 2023. According to Prof. Dr. To Trung Thanh, this reflects the substantial difficulties the private sector continues to face following the severe and prolonged impact of the pandemic.<\/p>\n\n\n\n
\n

More Grounds for Optimism<\/h2>\n

Dr. Can Van Luc, Chief Economist at BIDV, believes the current context provides grounds for greater optimism. Some international organizations forecast Vietnam\u2019s growth this year at 5.5%, above the East Asia and Pacific regional average of 4.5%. Many figures indicate that the economy is recovering, albeit unevenly. Vietnam and China are currently two of the few countries where per capita income has risen compared with pre-COVID-19 levels.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regarding consumption, the report notes that although final consumption recovered from COVID-19 in 2022, growing by 7.18%, its growth slowed in 2023 to 3.52%, primarily because of subdued economic conditions. Before the COVID-19 pandemic, final consumption was the largest and most stable component of aggregate demand in Vietnam, consistently growing by over 7% annually.<\/p>\n

Despite accounting for a large share of aggregate demand, final consumption has shown slower and less stable growth in recent years, constraining the economy\u2019s growth momentum. Final consumption in both the state and private sectors declined compared with 2022.<\/p>\n

Amid unfavorable external conditions, the Government introduced numerous measures to stimulate consumption. However, the research shows that the share of government consumption has changed little over the years and has even tended to decline slightly. The role of government consumption in Vietnam\u2019s GDP remains limited and is still relatively small compared with countries at similar levels of development and others in the region.<\/p>\n

With no substantive improvement in the economic model, NEU experts recommend that the Government rely primarily on demand-side policies to achieve high growth as early as 2024, in the short term. Aggregate demand-side growth drivers\u2014investment, consumption, and exports\u2014need to be restored quickly and strengthened further.<\/p>\n

Agreeing with many of the experts\u2019 assessments in the publication, Dr. Can Van Luc, Chief Economist at BIDV, also recommended strengthening traditional growth drivers such as public investment, consumption, exports, and support policies. He also called for attention to promoting new growth drivers such as digital transformation, green growth, institutional reform, productivity gains, and regional linkages\u2026<\/p>\n

The experts also noted that private investment is currently unlikely to rise significantly because of difficulties facing businesses. Increasing public investment disbursement and improving its quality therefore play a pivotal role. The Government needs to stimulate private consumption by maintaining macroeconomic stability, adjusting income taxes, improving the soundness of asset markets, and strengthening social welfare policies. Diversifying export markets and leveraging the FDI sector to boost exports are also measures that require attention.<\/p>\n

However, the experts cautioned that the economy cannot rely on public investment in the long term. Instead, measures are needed to improve the investment environment and unlock private investment resources so that they become the primary and most important growth driver.<\/p>\n\n\n\n
\n

Implement Prudent Fiscal Policy to Stimulate Consumption<\/strong><\/h2>\n

According to Shantanu Chakraborty, ADB Country Director for Vietnam, GDP growth in the past quarter demonstrates the resilience of Vietnam\u2019s economy and was among the strongest in the region.<\/p>\n

However, Vietnam\u2019s economy still faces challenges and risks in 2024. Externally, these include instability in global markets caused by the conflicts in Ukraine and the Middle East. These challenges are disrupting supply chains and reducing demand for Vietnamese goods.<\/p>\n

Domestically, Vietnam needs to boost consumption in combination with fiscal policy to increase the supply of cash in circulation. In the region, most countries maintaining strong growth momentum have highly developed domestic markets and very high domestic consumption. India and Indonesia are examples of countries sustaining strong growth driven by their domestic markets, Shantanu Chakraborty said.<\/p>\n

To stimulate domestic consumption, the ADB Country Director recommended that Vietnam implement prudent fiscal policy to boost consumption through the spillover effects of public investment or other incentives, such as extending the value-added tax reduction or strengthening social welfare measures. At the same time, Vietnam needs to ensure that public investment is directed appropriately.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n

Hoang Yen<\/a><\/h2>\n

Link: https:\/\/thoibaotaichinhvietnam.vn\/tap-trung-thuc-day-tong-cau-de-phuc-hoi-kinh-te-nhanh-hon-149173.html<\/a><\/p>\n

This is an automated translation. If you notice any errors, please contact the Department of Communications, National Economics University at phongtruyenthong@neu.edu.vn<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

(TBTCO) – With no substantive improvement in the economic model, the Government will have to rely primarily on demand-side policies to achieve high growth as early as 2024. Growth drivers\u2014in investment, consumption, and exports\u2014need a further boost. This assessment was presented at the national scientific conference and launch of the Vietnam Annual Economic Review 2023, themed \u201cVietnam\u2019s Economy in 2023 and Outlook for 2024: Boosting Aggregate Demand for Economic Growth in a New Context,\u201d organized by National Economics University (NEU) in collaboration with the Central Economic Commission and the National Assembly\u2019s Economic Committee on April 17. Focus on boosting aggregate demand for faster economic recovery. The current value-added tax reduction policy has yielded positive results. File photo Declining Aggregate Demand Signals a Risk of Recession According to Prof. Dr. Pham Hong Chuong, President of NEU, 2023 was one of the most difficult years for Vietnam\u2019s economy in recent years. Growth in 2023 remained far below pre-COVID-19 levels. Most notable were weakening aggregate demand and its key components, such as consumption and investment, alongside a lack of improvement in the quality of growth. \u201cDeclining aggregate demand indicates that the economy faces a risk of recession. This affects overall economic growth, causing consequences such as falling industrial production, rising unemployment, and lower household incomes and spending\u2026\u201d Prof. Dr. Pham Hong Chuong observed. Prof. Dr. To Trung Thanh analyzed the downward trend in aggregate demand and its economic impact in NEU\u2019s Vietnam Annual Economic Review 2023. According to the review, all components of Vietnam\u2019s aggregate demand showed signs of slower growth in 2023. Specifically, final consumption and capital formation grew by 3.52% and 4.09%, respectively, down sharply from 7.09% and 5.40% in 2022. Consequently, GDP growth in 2023 came primarily from the balance of exports and imports of goods and services at constant prices, with a smaller deficit than in the previous year. Illustrative photo The trade balance shifted from a deficit in 2022 to a surplus in 2023. However, declining imports also indicate that production faces considerable difficulties, particularly in the next production cycle. In this situation, GDP growth may not truly reflect the \u201chealth\u201d of the economy, Prof. Dr. To Trung Thanh commented. Total realized investment across the economy in 2023 at current prices was estimated at VND 3,423.5 trillion, up 6.2% from 2022. Within this total, realized investment from the state budget rose 21.2% year over year. This resulted from efforts by the Government, ministries, sectors, and localities to decisively accelerate public investment implementation as a key driver of economic growth amid difficulties facing non-state sources of funding. Private Sector Still Faces Major Difficulties Also in 2023, the state sector\u2019s share of investment rose to 27.85%, compared with 25.61% in 2022. Meanwhile, investment growth in the non-state sector remained very low compared with other sectors of the economy, at just 3.4%, whereas this sector recorded average growth of 15% before the pandemic, during 2016-2019. Specifically, private investment grew by only 2.7%, compared with 8.9% in 2022; foreign direct investment (FDI) grew by just 5.4%, compared with 13.9% in 2022. The non-state sector\u2019s share of investment fell from 58.2% in 2022 to 56.1% in 2023. According to Prof. Dr. To Trung Thanh, this reflects the substantial difficulties the private sector continues to face following the severe and prolonged impact of the pandemic. More Grounds for Optimism Dr. Can Van Luc, Chief Economist at BIDV, believes the current context provides grounds for greater optimism. Some international organizations forecast Vietnam\u2019s growth this year at 5.5%, above the East Asia and Pacific regional average of 4.5%. Many figures indicate that the economy is recovering, albeit unevenly. Vietnam and China are currently two of the few countries where per capita income has risen compared with pre-COVID-19 levels. Regarding consumption, the report notes that although final consumption recovered from COVID-19 in 2022, growing by 7.18%, its growth slowed in 2023 to 3.52%, primarily because of subdued economic conditions. Before the COVID-19 pandemic, final consumption was the largest and most stable component of aggregate demand in Vietnam, consistently growing by over 7% annually. Despite accounting for a large share of aggregate demand, final consumption has shown slower and less stable growth in recent years, constraining the economy\u2019s growth momentum. Final consumption in both the state and private sectors declined compared with 2022. Amid unfavorable external conditions, the Government introduced numerous measures to stimulate consumption. However, the research shows that the share of government consumption has changed little over the years and has even tended to decline slightly. The role of government consumption in Vietnam\u2019s GDP remains limited and is still relatively small compared with countries at similar levels of development and others in the region. With no substantive improvement in the economic model, NEU experts recommend that the Government rely primarily on demand-side policies to achieve high growth as early as 2024, in the short term. Aggregate demand-side growth drivers\u2014investment, consumption, and exports\u2014need to be restored quickly and strengthened further. Agreeing with many of the experts\u2019 assessments in the publication, Dr. Can Van Luc, Chief Economist at BIDV, also recommended strengthening traditional growth drivers such as public investment, consumption, exports, and support policies. He also called for attention to promoting new growth drivers such as digital transformation, green growth, institutional reform, productivity gains, and regional linkages\u2026 The experts also noted that private investment is currently unlikely to rise significantly because of difficulties facing businesses. Increasing public investment disbursement and improving its quality therefore play a pivotal role. The Government needs to stimulate private consumption by maintaining macroeconomic stability, adjusting income taxes, improving the soundness of asset markets, and strengthening social welfare policies. Diversifying export markets and leveraging the FDI sector to boost exports are also measures that require attention. However, the experts cautioned that the economy cannot rely on public investment in the long term. Instead, measures are needed to improve the investment environment and unlock private investment resources so that they become the primary and most important growth driver. Implement Prudent Fiscal Policy to Stimulate […]<\/p>\n","protected":false},"author":9,"featured_media":37295,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[724],"tags":[],"class_list":["post-76769","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economic-information"],"acf":[],"_links":{"self":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/posts\/76769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/comments?post=76769"}],"version-history":[{"count":0,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/posts\/76769\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/media\/37295"}],"wp:attachment":[{"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/media?parent=76769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/categories?post=76769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/neu.edu.vn\/en\/wp-json\/wp\/v2\/tags?post=76769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}