General Director of the General Statistics Office Nguyễn Thị Hương

The country faces stiff obstacles in achieving growth targets of 6.5 per cent this year due to a low base in the first half. General Director of the General Statistics Office (GSO) Nguyễn Thị Hương spoke to Việt Nam News about the GDP growth forecast and its drivers of growth in the remaining months of 2023.

Việt Nam posted growth of just 3.72 per cent in the first six months, much lower than the initial target of 6.2 per cent. Do you think that the GSO's forecast of 6.5 per cent is over-optimistic?

According to the growth scenario set out by the Government, in order to reach GDP growth of 6.5 per cent for the whole year, the economy needed to expand 6.2 per cent in the first half. However, the actual rate for the first six months only reached 3.72 per cent, much lower than the set-out target.

To achieve a 6.5 per cent growth rate this year, an expansion of 9.1 per cent in the last six months is needed. This is a huge challenge given that the world economy still faces potential risks and global consumer demand remains weak. The General Statistics Office will continue to collect information from ministries, branches and localities to update economic growth scenarios for the next quarters.

What will be the main growth drivers in the second half?

Việt Nam’s economic growth in H2 will be driven by accelerating public investment, the main beneficiaries of which are the construction, transportation, and construction material production industries.

Reviving tourism, especially domestic tourism, will lead to growth in transportation, lodging and hospitality services to the pre-pandemic level. Agriculture and fisheries are expected to continue to grow steadily, with many agricultural products in the season having high export potential.

Effectively controlled domestic inflation is also a supportive factor. Fiscal and monetary policies as reducing taxes, fees, and interest rates, will support production and stimulate consumption.

What are the factors affecting 2023’s consumer price index (CPI)?

A 20.8 per cent increase in the base salary for civil servants, public employees, and members of the armed forces from July 1 will lead to rises in prices of other goods and services, which may put pressure on curbing 2023’s inflation.

Việt Nam Electricity (EVN)’s possible increase in electricity prices, the Government’s programmes to support economic recovery and step up public investment disbursement, and the recovery of tourism may also affect the price level in the remaining months of this year.

Việt Nam’s import of many kinds of materials whose prices are at a high level will put pressure on businesses’ production, thus pushing up prices of domestic consumer goods.

The adjustment of service prices managed by the State in the direction of correctly calculating all factors and costs into prices of medical and educational services will also have an impact on CPI.

In addition, the price of food, foodstuff, beverages, garment and textiles, as well as equipment and household appliances has increased in the last months. Natural disasters and epidemics can affect food prices in some localities, which will also make the index increase.

What are solutions to control inflation to reach the target set by the National Assembly?

In order to control inflation to reach the target set by the National Assembly, the GSO proposes the authorities closely monitor price and inflation movements in the world in order to take appropriate measures to ensure supply and stabilise domestic prices.

Ministries, sectors and localities need to prepare adequate supplies of goods, especially food and essential consumer goods and services, to ensure meeting people's needs.

For petrol products, it is necessary to ensure the domestic supply of petrol and diesel, and at the same time control the price of input materials and increase the use of domestic raw materials to gradually replace imported sources.

The Government also should continue operating the monetary policy proactively, flexibly and cautiously, in combination with the fiscal policy and other macroeconomic policies to control inflation. It is necessary to ensure adequate and timely supply of credit capital for the economy.

Ministries and branches need to step up communication work in order to provide timely and transparent information, create consensus in public opinion on the Government's price management, and stabilise inflation expectations.

Việt Nam successfully curbed inflation in the first half of 2023. Compared to other countries, Việt Nam doesn't have particularly high inflation, with a June increase by just 2 per cent over last year.

Inflation of the EU in May increased by 6.1 per cent year-on-year and the US by 4 per cent. In Asia, China's inflation rose by 0.2 per cent, Thailand's by 0.53 per cent; South Korea's 3.3 per cent; Indonesia's by 4 per cent; the Philippines 6.1 per cent; and Laos by 38.86 per cent.