Positive growth scenarios within reach

July 09, 2024 | 09:56
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Despite massive lingering challenges, domestic industrial production has been gradually escaping from a slowdown, with economic growth bouncing back over the past six months by dint of the government’s efforts to help businesses.

After growing 5.66 per cent in Q1, the Vietnamese economy bounced back to 6.93 per cent in the second quarter, only lower than the on-year Q2 rise of 7.99 per cent in 2022 in the 2020-2024 period.

Positive growth scenarios within reach
Positive growth scenarios within reach - illustration photo/ Source: freepik.com

In the first half of this year, it climbed increased 6.42 per cent on-year, only lower than the on-year growth rate of 6.58 per cent in the same period of 2022 in the 2020-2024 period.

“The economy has strongly been recovering thanks to the government’s efforts in helping enterprises out of difficulties, and businesses’ growing confidence in the domestic business and investment climate increasingly improved,” said Nguyen Thi Huong, general director of the General Statistics Office (GSO).

The Ministry of Planning and Investment (MPI) is now updating its new growth scenarios for the second half of this year, which will be submitted to the government soon. In its latest scenarios, the MPI forecasts that under the first scenario, the whole-year growth is expected to be 6 per cent, which may be reached if the average nine-month growth rate must be 6.12 per cent – including 5.85 per cent for Q2, 6.22 per cent for Q3, and 6.28 per cent for Q4.

Under the second scenario, the entire-year growth rate is forecasted to sit at 6.5 per cent which may be recorded if the average nine-month economic growth rate must be 6.75 per cent, including 6.32 per cent for Q2, 6.79 per cent for Q3, and 7.08 per cent for Q4.

The MPI holds that the economic performance may fall to the second scenario, and if the growth rate is kept as it did in or event better than Q2, the rate for Q3 and Q4 will be higher as the economic conditions are being increasing improved, and the entire-year growth may be even higher than the set 6.5 per cent level.

“However, we must not be too optimistic and we must continue taking great caution in macroeconomic management,” said Prime Minister Pham Minh Chinh last week.

The GSO reported that as compared to the corresponding period last year, the added value of the whole industrial sector in the first half of 2024 increased 7.54 per cent on-year, only lower than the on-year rise of 8.32 per cent in the same period of 2022 in the 2020-2024 period, creating 2.44 per cent in the added value increase in the economy.

The GSO reported that the manufacturing and processing sector continues being the key driver of economic growth as its six-month growth hit 8.67 per cent on-year, generating 2.14 per cent growth of industrial production. Meanwhile, also in the first half of 2024, the sector of production and distribution of electricity increased 13.26 per cent on-year, and the sector of supply of water, and management and treatment of waste climbed 7.13 per cent.

Some key economic sectors have witnessed a rise in performance in the first six months of this year. For example, state-owned Vietnam National Coal and Mineral Industries Group (Vinacomin) reported last week that its total revenue is estimated to be about $3.7 billion – hitting 50.8 per cent of the year’s plan and up 6.6 per cent on-year.

Vinacomin exploited 20.61 million tonnes of rough coal, up 3.7 per cent on-year. Its consumed coal hit 26.77 million tonnes, up 8.6 per cent on-year. Its electricity production reached 5.26 billion kWh, up 14 per cent on-year.

In another case, the Electricity Regulatory Authority of Vietnam under the Ministry of Industry and Trade reported that in the first half of this year, Vietnam’s total produced and imported electricity is estimated to be 151.7 billion kWh, which was 776 million kWh higher than planned. Such a volume per day hit 833.5 million kWh, up 11.3 per cent on-year. The maximum power of the whole electricity system hit 48.880MW, up 7.87 per cent on-year.

Meanwhile, with its six-month statistics remaining unavailable now, PetroVietnam has also reported its positive five-month performance. Its total revenue reached about $16.36 billion, exceeding by 34 per cent of the initial plan and up 15 per cent on-year. PetroVietnam’s contribution to the state budget stood at an estimated $2.3 billion, which was 46 per cent higher than planned and up 2 per cent on-year. Its consolidated pre-tax profit touched an estimated $920.83 million, surpassing the plan by 92 per cent and up 6 per cent on-year.

PetroVietnam’s other production indexes in the first five months exceeded plans by 3.5-35.7 per cent on-year. For instance, crude oil exploitation stood at 4.19 million tonnes, or 19.5 per cent higher than planned, and natural gas exploitation sat at 2.91 billion cubic metres, exceeding the plan by 35.7 per cent.

According to the GSO, enterprise confidence has bounced back. In June, the country saw 15,700 newly established businesses, registered at $5.96 billion, with a total registered worker number of 85,600 – all up substantially compared to May. In the first half of this year, Vietnam saw nearly 80,500 newly established businesses registered at over $31 billion, registering to use nearly 512,000 workers.

In the first half of 2024, 71,400 businesses halted operations in Vietnam, up 18.6 per cent on-year; nearly 28,800 enterprises stopped operations and waited for dissolution procedures, down 7.3 per cent on-year; and 10,200 enterprises completed such procedures, up 15.4 per cent. On average, 18,400 enterprises left the market every month.

However, according to the GSO’s Q2 survey on manufacturing and processing enterprises released last week, around 40 per cent of respondents believed their Q3 performance will improve on the second quarter. Some 42.2 per cent held that their Q3 production and business situation will be stable and only 17.1 per cent predicted the situation will be more difficult.

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By Khoi Nguyen

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