6 difficulties and challenges for Vietnam's economy in 2024

At the 7th session of the 15th National Assembly on the morning of May 20, Chairman of the National Assembly's Economic Committee Vu Hong Thanh presented a report on the supplementary assessment of the results of the implementation of the socio-economic development plan and the state budget in 2023; the implementation of the socio-economic development plan and the state budget in the first months of 2024.

Accordingly, Mr. Thanh suggested that the Government pay more attention to and evaluate more carefully 6 issues considered as challenges to Vietnam's economy in 2024.

Firstly, although the GDP growth rate in the first quarter of 2024 has improved, it has not returned to the necessary trajectory, is not enough to create breakthroughs for sustainable development and cannot help our country escape the risk of falling into the middle-income trap.

The growth poles have not really played their role in connecting and promoting regions, and at the same time, they have also been affected by the general decline of the domestic and world economies.

Domestic aggregate demand is weak and slow to recover amid signs of increasing inflationary pressure; consumer demand increased by 5.3%, lower than expected; private investment demand increased by 4.2%; high airfares negatively impacted domestic tourism growth; the service trade deficit has not improved...

Second, the production and business activities of enterprises still face many difficulties, the number of enterprises withdrawing from the market (86.4 thousand enterprises) is higher than the number of enterprises entering and re-entering the market (81.3 thousand enterprises). Low domestic and international demand, abnormal exchange rate fluctuations... are the main factors affecting the production and business activities of enterprises.

Third, the financial and monetary markets still have potential risks and challenges, and the bad debt ratio tends to increase. Low credit growth in the context of falling interest rates shows that businesses' ability to absorb capital is still limited.

Fourth, the implementation of the project to restructure the system of credit institutions associated with bad debt settlement in the 2021-2025 period and the plan to handle weak credit institutions, projects and works with slow progress, ineffective investment, and prolonged losses is still slow.

Many highway and key traffic projects, especially in the Mekong Delta and the Southern region, lack sand for filling, affecting construction progress as well as disbursement of public investment capital. Compensation, support and resettlement in some localities are still slow; the relocation of technical infrastructure, especially high-voltage power lines, has not met the requirements.

Fifth, the real estate market has signs of recovery but the most difficult thing is the process and procedures for developing social housing projects;

There are cases of “circumventing the law” to invest in and buy and sell social housing apartments. The progress of implementing the 120 trillion VND social housing loan package is still slow, not meeting expectations.

In addition, real estate businesses continue to face difficulties in liquidity and cash flow. Apartment prices, including social housing in some areas, have increased dramatically due to scarce supply and an imbalanced product structure in the market.

Land prices show signs of increasing again in big cities, even increasing locally due to speculation, affecting the housing needs of people and workers.

"In terms of socio-economic efficiency, land speculation leads to a number of consequences such as people with real needs cannot access land while the land is abandoned (due to speculation);

Social resources, instead of being used for investment in production, business and job creation, are being "buried" in land, increasing business costs and reducing the competitiveness of the economy; people who need to buy houses and land are actually having to pay large sums of money to speculators, the poor are having to pay more for their housing needs, causing the gap between rich and poor in society to widen," the report stated.

Finally, the reform of administrative procedures still has many shortcomings, causing difficulties for businesses and people. The fear of mistakes and responsibility has not been completely resolved; discipline and order are sometimes and in some places not strict; the situation of cadres, civil servants and public employees quitting their jobs still occurs...

Mr. Thanh emphasized that the world situation in 2024 will continue to have complex and unpredictable developments. In the country, 2024 is a "sprint" year, which is very important in successfully implementing the Resolution of the 13th National Party Congress and the Resolution of the National Assembly on the 5-year Socio-Economic Development Plan 2021-2025.

""The Government is requested to fully identify the achievements and shortcomings of the economy, clarify objective and subjective causes, and lessons learned to find solutions," the Chairman of the Economic Committee stated.