In 2023, Vietnam’s economy expanded by 5.05%, falling short of the government’s target growth rate of 6.5%.
This underperformance was attributed to a slowdown in overseas demand, impacting the Southeast Asian export hub. In contrast, the 2022 annual Gross Domestic Product showcased a rapid 8.02% expansion, marking its fastest growth in 25 years, driven by a rebound in exports and domestic retail sales post the lifting of pandemic lockdown measures.
While Vietnam has been known for its robust economic growth, this year witnessed a deceleration due to weakened global demand. The International Monetary Fund projected a 4.7% GDP growth for 2023. The latest expansion also lagged behind the average annual growth of 5.87% observed over the previous decade, according to data released by the General Statistics Office.
Annual exports for Vietnam dropped by 4.4% to $355.5 billion, with key commodities like coffee experiencing a 9.6% decline in shipments. Additionally, smartphone exports, a significant source of foreign currency, saw an 8.3% decrease. On a positive note, retail sales increased by 9.6%, and foreign tourist arrivals surged to 12.6 million, though still below the pre-pandemic 2019 figure of 18 million.
The industrial production index for 2023 registered a 1.5% increase compared to the previous year. Despite falling short of the 6.5% government target, the statistics agency described this year’s growth as a positive outcome, positioning Vietnam among the fastest-growing economies globally.
In the fourth quarter, Vietnam’s economy rebounded with a 6.72% growth, following expansions of 5.47% and 4.25% in the third and second quarters, respectively. However, economic activity faced challenges, including a government crackdown on corruption, causing bureaucratic caution and impacting permit issuance. Moreover, the country grappled with reduced factory orders, mass layoffs, power blackouts, and a sluggish stock market.
Analysts acknowledged the upbeat tone in light of uncertainties but highlighted challenges such as declining export orders, ongoing difficulties in the corporate bond and real estate markets, and the potential rise of bad debts affecting the banking sector. Despite the adverse factors, some analysts noted that Vietnam’s economy maintained a satisfactory growth rate compared to regional and global benchmarks. Hanoi-based economist Le Dang Doanh characterized 2023 as a “very tough year for Vietnam,” citing increased bankruptcies, widespread job losses, and diminished buying power in middle and lower-income groups.
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Source: Vietnam Insider