TCCS – As 2023 came to an end, the global economy continued to face significant challenges, characterized by uncertainty and instability. While inflation moderated, it remained at high levels, prompting major economies to maintain tight monetary policies with high interest rates. Additionally, global trade, consumption, and investment weakened, while protectionism and trade defense measures increased, affecting imports and exports worldwide.
Despite these difficulties, Vietnam’s economy in 2023 achieved notable progress, earning strong recognition from international organizations. However, external economic challenges and domestic structural limitations are now key obstacles to Vietnam’s 2024 socio-economic development goals.
Global Economic Landscape in 2023
🌍 Growth & Recovery in Key Economies:
The global economy struggled with geopolitical tensions, such as the Russia-Ukraine conflict, new conflicts in the Middle East and the Red Sea, and severe climate conditions affecting food production and consumption.
Inflation remained high, with weak trade growth and slow consumer confidence recovery. Many countries continued tight monetary policies to combat inflation, leading to subdued demand and slow economic expansion.
Major economies experienced unstable financial and real estate markets, while stricter sustainability regulations impacted imports and increased trade protectionism.
📉 Economic Forecasts from Leading Institutions:
Global GDP growth projections for 2023:
EU: 3.1%
IMF: 3.0%
OECD: 2.9%
Fitch Ratings: 2.9%
World Bank: 2.1%
📊 Key Markets Overview:
U.S. Economy: Growth of 4.9% in Q3 2023, driven by strong labor markets and stable consumer spending, but manufacturing sector decline in Q4 indicates potential slowdown in 2024.
China: Struggled with weak post-pandemic recovery and deepening real estate crisis. Government efforts to boost public investment and ease monetary policy had limited effects on industrial and service sectors, with deflation risks rising. GDP growth for Q4 expected at 5.2%.
Eurozone: Faced unstable growth since late 2022, with manufacturing contraction for seven consecutive months. Economic recession risks intensified due to persistent inflation and declining production.
Japan: GDP declined by 2.9% in Q3, marking the largest drop since the COVID-19 peak in Q2 2020, highlighting economic fragility and weak recovery momentum.
📦 Global Trade Decline & Uncertain 2024 Outlook:
Global trade value in 2023 estimated at $30.7 trillion, down 5% YoY.
Merchandise trade shrank by 8%, but services trade expanded by 7%.
Persistent geopolitical tensions, high debt levels in developing nations, and widespread economic instability may negatively impact global trade patterns in 2024.
💰 Commodity Prices & Inflation Trends:
Energy prices dropped 8.2%, while non-energy commodities rose slightly (1.7%).
Global inflation slowed, but U.S. inflation remained at 3.1%, Eurozone CPI at 2.4%, and China faced deflation risks (-0.5% in November 2023).
Japan’s inflation exceeded 3% for 18 consecutive months, surpassing the Bank of Japan’s 2% target, prompting monetary policy adjustments.
🏦 Central Bank Monetary Policy Reactions:
Over 160 interest rate hikes globally in 2023, but major central banks stopped further increases in Q3 (except Australia).
The Fed & ECB hinted at possible rate cuts for 2024, while China & Japan faced more complex monetary challenges.
Vietnam’s Economy in 2023
Vietnam entered 2023 facing both opportunities and challenges. Beyond global economic pressures, Vietnam had to address long-standing domestic issues while striving to maintain macroeconomic stability, boost economic growth, preserve major financial balances, and support business activity.
[02/09/2023 18:52:51] According to the General Statistics Office, Vietnam’s trade balance for the first eight months of 2023 recorded a surplus of $20.19 billion, a significant increase from $5.26 billion in the same period of the previous year.During this period, total import-export turnover reached $435.23 billion, marking a 13.1% decrease year-over-year. Specifically:
Exports declined by 10%, while
Imports fell by 16.2%.
The United States remained Vietnam’s largest export market, with an estimated export value of $62.3 billion, whereas China was Vietnam’s largest import market, with import turnover reaching $68.1 billion.
📦 Container unloading at Gemalink International Port, Phu My Town, Ba Ria – Vung Tau Province (Photo: VNA)
Vietnam’s annual GDP growth for 2023 was estimated at 5.05%, showing a gradual recovery across quarters:
Q1: 3.41%
Q2: 4.25%
Q3: 5.47%
Among key sectors contributing to GDP growth:
Agriculture, forestry, and fisheries grew by 3.83%, accounting for 8.84% of total GDP growth, remaining a key pillar of the economy.
Industry & construction expanded 3.74%, contributing 28.87%.
Services grew by 6.82%, making up 62.29%, leading overall economic growth.
📉 However, industrial growth was only 3.02%, the lowest rate recorded from 2011 to 2023, contributing just 1 percentage point to overall GDP expansion. Meanwhile, service sector growth stood at 6.82%, surpassing previous growth rates of 2.01% (2020) and 1.75% (2021).
💰 Nominal GDP for 2023 was estimated at VND 10,221.8 trillion ($430 billion USD), while GDP per capita reached VND 101.9 million ($4,284 USD), an increase of $160 compared to 2022.
Despite not reaching the National Assembly’s target of 6.5% GDP growth, key reasons include:
1️⃣ Weak external demand due to global inflation pressures, prompting major economies to raise interest rates and tighten monetary policies, leading to reduced consumption and investment activities.
2️⃣ Domestic demand recovery was slow, affecting both consumption and investment, as indicated by weak retail sales and service revenue growth, along with low credit expansion compared to previous years.
Public Investment & FDI in 2023
💰 Public Investment Shows Strong Growth In 2023, total social investment capital was estimated at VND 3,423.5 trillion, up 6.2% year-over-year. Breakdown by sector:
State sector: VND 953.6 trillion (27.8% of total capital, up 14.6%)
Non-state sector: VND 1,919.7 trillion (56.1%, up 2.7%)
FDI sector: VND 550.2 trillion (16.1%, up 5.4%)
Government budget-funded investment reached VND 625.3 trillion, equivalent to 85.3% of the annual target, marking a 21.2% increase over 2022. Efforts to accelerate public investment disbursement played a crucial role in maintaining economic growth, particularly major infrastructure and inter-regional projects, ensuring effective policy implementation with strict compliance oversight.
📈 Stable FDI Inflows Amid Global Uncertainty Despite global economic challenges, FDI remained a bright spot, with registered capital reaching $36.61 billion (up 32% YoY).
New FDI registrations: $20.2 billion (up 62.2%)
Adjusted FDI capital:up 14%
Foreign share acquisitions:$8.5 billion (up 65.7%) FDI actual disbursement was estimated at $23.2 billion, the highest level recorded in Vietnam to date.
Trade Performance & Business Sector Activity
📦Import-Export Activity Total import-export turnover in 2023 was $683 billion, down 6.6% from 2022.
Vietnam recorded a trade surplus of $28 billion, compared to $12.1 billion in 2022.
🏢 Business Sector Developments
160,000 new businesses were registered with total capital exceeding VND 1,521 trillion, marking a 7.2% increase.
However, business exits reached 172,578 firms, a 20.5% increase from 2022, the highest withdrawal rate since 2017.
📊 Inflation & CPI Trends
Average CPI in 2023 rose 3.3%, matching 2022’s rate.
Fuel prices dropped, reducing overall inflation by 0.6 percentage points, while housing and education costs added 1.7% to CPI growth.
Core inflation averaged 4.2%, higher than total CPI due to declining fuel and gas prices, which were excluded from core inflation calculations.
💰 Credit Growth & Interest Rate Adjustments
Vietnam’s central bank (SBV) reduced benchmark interest rates 4 times in 2023, lowering:
Overnight lending rates:from 5.5% → 5%
Refinancing rates:from 5% → 4.5%
Discount rates:from 3.5% → 3%
Maximum deposit interest rates for short-term accounts fell from 5% to 4.75%.
Despite lower borrowing costs, credit growth only reached 9.87% (below the target of 14–15%), primarily due to:
Weak demand for investment, production, and consumption
Loan accessibility issues
Real estate sector slowdown impacting credit absorption capacity
FDI: Sankoh Vietnam Co., Ltd. Contributes to the Export Growth of Hòa Bình Province
Inspection of products at Sankoh Vietnam Co., Ltd. (a 100% Japanese-invested enterprise) in the Da River Left Bank Industrial Park, Hoa Binh Province. _ Photo: VNA (Vietnam News Agency)
Vietnam’s Economic Outlook for 2024
In 2024, Vietnam’s economy is forecast to continue facing both opportunities and challenges. The biggest obstacles come from external negative impacts (especially the slowdown in growth from the U.S., China, and Japan) and delays in public sector implementation due to several factors. In this context, two scenarios are projected for Vietnam’s economy in 2024.
Scenario 1: The global economy continues to recover slowly, inflation remains high, interest rates are not widely reduced, and supply chains continue to experience severe disruptions on certain transportation routes.
Scenario 2: Most assumptions from Scenario 1 remain unchanged, with the following adjustments: global GDP grows by 3.2%, the total money supply increases by 10%, credit expands by 16%, import prices fall by 5%, and the VND/USD exchange rate at commercial banks increases by 2%. Additionally, stronger reforms in the business environment will support new economic models (such as the digital economy, circular economy, and creative economy), along with institutional reforms to improve growth quality, particularly labor productivity.
Key Policy Recommendations
Reforming and Innovating the Microeconomic Foundation
Review and assess the implementation results, and propose new specific solutions to implement resolutions by the Party Central Committee and the Politburo on transforming the growth model, promoting effective international economic integration, developing the private sector, orienting foreign investment attraction, proactively participating in the Fourth Industrial Revolution, regional development, industrialization, and modernization.
Continue to guide and effectively implement key laws of the market economy institution, such as the Land Law, Real Estate Business Law, Housing Law, Enterprise Law, Investment Law, Bidding Law, Public Debt Management Law, Public Investment Law, Competition Law, Cybersecurity Law, E-Transactions Law, and the Consumer Rights Protection Law, among others.
Maintaining Macroeconomic Stability
Research and develop a comprehensive program to boost economic growth during 2024–2025.
Pay due attention to consolidating and stabilizing the macroeconomy, preserving policy space for macroeconomic management, and applying flexible macroeconomic policies according to scenarios to respond to unfavorable global and regional economic developments.
Accelerate economic restructuring and sectoral reforms toward diversification, strengthening internal capacity and the economy’s resilience to unpredictable changes in global trade and economic conditions.
Monetary Policy
Continue to manage monetary policy in a proactive, flexible, cautious, and coordinated manner to foster economic growth while maintaining macroeconomic stability, controlling inflation, and ensuring major economic balances.
Manage the exchange rate flexibly, in line with market developments, macroeconomic balance, and monetary policy objectives. Emphasize communication to prioritize protecting the value of the Vietnamese đồng (VND), avoiding devaluation to support exports. Closely monitor fluctuations in USD, CNY, EUR, and JPY exchange rates, as well as the prices of essential global commodities, to adjust exchange rate policy in combination with other tools to limit inflationary impact and protect Vietnam’s macroeconomic environment.
Study and consult with commercial banks about the possibility of further lowering lending rates for priority sectors. Review and assess credit flows into production sectors to develop appropriate credit management solutions.
Flexibly manage liquidity in the commercial banking system to support credit activities and government bond issuance.
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