VINACHEM

Growth in Vietnam’s economy may slow down next year due to massive complexities, including a reduction in global demand caused by tightened spending.

This week will see the government officially announce the country’s whole-year economic growth figure, which is expected to stand at around 8-8.2 per cent. But the government has also said that such a high rate may not be maintained in 2023 due to numerous risks caused by global geopolitical tensions, which will have direct negative impacts on the Vietnamese economy.

It is partly why the government and the National Assembly have set out a less optimistic target for economic growth to reach 6.5 per cent for 2023.

However, the Asian Development Bank (ADB) foresees even more challenges for the economy moving into next year.

Under the ADB’s calculations, while trade continues to expand, signs show weakening global demand for the country’s exports. The price manufacturing index (PMI) dipped from 50.6 in October to 47.4 in November, and employment was down for the first time in eight months. Little liquidity is left for economic recovery after recent monetary tightening, a decline in corporate debt issuance from January to October, and a slowdown in disbursement of public investment.

The government is expecting that for the entire year, the total commodity export-import turnover will be $735 billion, split almost equally in terms of exports and imports. Vietnam’s total 11-month commodity trade turnover is estimated to stand at $673.82 billion, up 11.8 per cent on-year. The export turnover touched $342.21 billion, up 13.4 per cent, and the import turnover was $331.61 billion, up 10.1 per cent.

However, such an attainment has revealed some signal of risks. Specifically, the export growth has far largely comes from the increase in prices as opposed to volume. Additionally, businesses are facing numerous difficulties, with a big decline in orders due to weak demand.

Figures from the General Statistics Office’s showed that monthly trade values over during September-November dipped to about $29.5 billion of exports and over $28 billion of imports, from $31.3 billion and $31 billion, respectively, in the March-August period. Notably, the year’s end often see a rise in exports thanks to global demand rising.

The Ministry of Industry and Trade forecast that the situation will continue into next year, which will continue affecting Vietnam’s economic growth. Currently, export-import turnover is doubling GDP.

Under its calculations, Vietnam’s industrial production increased 10.4 per cent on-year in November, which was lower than the on-year rise of 16.5 per cent in October.