Vietnam to prioritise economic growth amid inflationary pressures

20 May 2024

Vietnam's economy is experiencing increasing pressure, and the government intends to maintain policies that foster growth.

This is according to a statement by the country’s Deputy Prime Minister, Le Minh Khai on Monday.

Khai highlighted that inflation is increasing while credit growth remains subdued. Additionally, he noted that global geopolitical conditions are unfavourable and unpredictable.

“It's a huge challenge to reach this year's socio-economic targets,” Khai commented during a month-long National Assembly meeting getting underway on Monday.

Vietnam aims to achieve economic growth between 6.0% and 6.5% this year, surpassing the 5.05% expansion recorded last year, Reuters news agency reports.

Vietnam, emerging as a manufacturing powerhouse and capitalising on the realignment of supply chains amid US-China tensions, is now facing the impact of higher global interest rates, which are dampening demand for goods. Despite boasting one of the fastest-growing economies in Asia, its expansion remains below the pre-pandemic level of 7%.

Khai affirmed that the country will endeavour to achieve the highest possible economic output. However, he cautioned that Vietnam is confronting the prospect of significant inflationary pressure this year.

Vietnam's economy experienced a slowdown in the first quarter due to an uneven recovery in exports and manufacturing activity.

Nevertheless, the return of a sense of political stability is anticipated to bolster sentiment moving forward, Bloomberg reports. Over the weekend, the Communist Party announced the nomination of a new president and the chairman of the National Assembly.

Furthermore, the Deputy Prime Minister added that Vietnam will persist with policies conducive to economic growth, which include efforts to reduce loan interest rates, restructure loans for struggling firms, and increase public investment.

He stressed that Vietnam will adhere to its target of achieving 15% credit growth this year.