Vietnam to prioritise economic growth as challenges mount

VIETNAM’S government will prioritise supporting economic growth amid lingering challenges from weak global demand, Deputy Prime Minister Le Minh Khai said.

Gross domestic product growth has picked up but it still faces many challenges, Khai said in an address to the National Assembly as it convened for the summer session on Monday (May 20). Industrial activity is recovering at a slow pace, he said.

Vietnam, which has turned into a manufacturing powerhouse and benefited from shifting supply chains amid US-China tensions, is feeling the brunt of elevated interest rates globally as they depress demand for goods. Although the economy’s expansion has been among the fastest in Asia, it’s still below the pre-pandemic level of 7 per cent.

The country will strive to meet the highest economic output possible, Khai said, while adding that the South-east Asian nation faces the prospect of high inflationary pressure this year.

While the Israel-Hamas war has so far had a limited economic impact globally, any escalation in tensions with Iran could potentially choke trade flows through the Strait of Hormuz – which some estimate could result in a US$1 trillion drop in world GDP.

Vietnam’s government targets economic growth of 6 to 6.5 per cent this year – higher than the 5.8 per cent projected by the International Monetary Fund. The official inflation goal is between 4 per cent and 4.5 per cent.

SEE ALSO

Vietnam forfeits billions of US dollars in foreign aid amid anti-graft freeze

Investors still flocking to Vietnam despite political upheaval

As US hikes China tariffs, imports soar from China-reliant Vietnam

Vietnam’s upcoming subsea cables may draw more investors to the country

More

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

The government will continue policies including lowering lending interest rates, delaying debt payments and reducing taxes to support business, Khai said.

Vietnam’s economy slowed in the first quarter owing to an uneven recovery in exports and manufacturing activity. The return of an atmosphere of political stability is expected to support sentiment going ahead.

The Communist Party announced the nomination of a new president and the chairman of the National Assembly over the weekend, in appointments that could reassure investors that the revolving door of top politicians will end. BLOOMBERG