Vietnam to prioritise economic growth as challenges mount
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Vietnam to prioritise economic growth as challenges mount

Labourers work at a private garment factory in Hanoi on Jan 8, 2021. (Photo: Reuters)
Labourers work at a private garment factory in Hanoi on Jan 8, 2021. (Photo: Reuters)

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 Monday. 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%.

The country will strive to meet the highest economic output possible, Khai said, while adding that the Southeast 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%-6.5% this year — higher than the 5.8% projected by the International Monetary Fund. The official inflation goal is between 4% and 4.5%.

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.

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