Need to modernize monetary policy and end regulations that allow debt restructuring

On May 12, 2022, Economic and Forecast Magazine, an agency of the Ministry of Planning and Investment, organized the Forum “Vietnam economic forecast 2022-2023: Growth scenarios and prospects for a number of economic sectors” main economy”.

The business environment is increasingly facing new and unpredictable challenges

Speaking at the opening of the Forum, Deputy Minister of Planning and Investment Tran Quoc Phuong said that 2022 is an important year, creating a foundation for implementing the goals of Vietnam’s five-year plan 2021-2025. .

Going through the first 4 months of 2022, although the world situation has many complicated developments, in general, our country’s economy continues to recover and there are many signs of improvement in a number of industries and fields.

Specifically, GDP growth in the first quarter of 2022 is estimated at 5.03% over the same period; inflation was under control, consumer price index (CPI) in the first 4 months of 2022 increased by 2.1%, major balances in finance, currency, credit were guaranteed, state budget revenue reached positive results.

The good news is that in the first quarter of 2022, Vietnam’s Doing Business Index increased to 73 percentage points, up 12 percentage points compared to the fourth quarter of 2021, the highest level since the 4th outbreak.

The number of newly established enterprises in the first 4 months of 2022 reached 49,591 enterprises – the highest in the first 4 months of the year so far in Vietnam.

Foreign direct investment capital realized in Vietnam in the first 4 months of 2022 is estimated at 5.92 billion USD, the highest value in the first 4 months of the year in the years 2018-2022, creating an important driving force for growth. economy in 2022.

According to Deputy Minister Tran Quoc Phuong, from the beginning of the year until now, our country has witnessed some optimistic forecasts from international organizations, such as the Asian Development Bank (ADB) forecasting Vietnam’s economic growth. will recover at 6.5% in 2022 and reach 6.7% in 2023; The World Bank forecasts Vietnam’s GDP growth will reach 5.3% in 2022, then stabilize around 6.5%. The International Monetary Fund (IMF) lowered its forecast for global economic growth in 2022 to 3.6%, but believes that, in Vietnam, the economic recovery process will be strengthened from the implementation of the Recovery Program. recovery and socio-economic development. Vietnam’s GDP will grow at 6% in 2022 and 7.2% in 2023.

Although optimistic about Vietnam’s economic prospects, the Deputy Minister also realized that the business environment is increasingly facing new and unpredictable challenges. In the international arena, the US economy is showing signs of slowing down, inflation is high, the ability to implement tight monetary policy is high while purchasing power is low. The European economy is facing the risk of recession when oil and metal prices rise due to the impact of the Russia-Ukraine conflict. China’s economy faces the risk of slowing growth…

In the ASEAN region, growth in the export sector has shown signs of slowing down, the PMI in March 2022 at 51.7 points, the lowest level in the past 6 months. In particular, inflation is increasing in many parts of the world due to the sharp increase in global food and energy prices, which has been creating a knock-on effect on the prices of other goods and services.

In that context, the international political – economic picture is undergoing great changes, Deputy Minister Tran Quoc Phuong said that forecasting work on macroeconomic and sectoral economic prospects should be updated based on the current situation. on scientific, in-depth and multi-dimensional analysis. These are very necessary efforts to contribute to policy making as well as activities of investors and businesses, to realize the development goals of the country as the Resolutions of the Government. proposed by the government.

Fiscal policy should take the lead in supporting the economy, the regulations that allow debt restructuring should be stopped

At the Forum, sharing his assessment of Vietnam’s economy, Mr. Francois Painchaud, the IMF’s Resident Representative in Vietnam and Laos, said that Vietnam has successfully maintained fiscal stability and external balance. and financial stability.

Macro-economic policies have helped to alleviate the impact of Covid-19, in particular, the Government’s Economic Development and Recovery Program was implemented appropriately and in a timely manner to support growth recovery. shared.

However, the recovery has been uneven and there are some risks to the growth outlook.

Accordingly, the risk to growth is tilted towards slower growth while the risk to inflation is tilted towards an increase in inflation. Besides, there are other risks such as tightening of global financial conditions, developments in the real estate market and domestic corporate bonds…

Mr. Francois Painchaud suggested that fiscal policy should take the lead in supporting, especially if the risk of growth slowdown becomes a reality. He also suggested that Vietnam needs to modernize its monetary policy and end regulations that allow debt restructuring, and at the same time strengthen financial supervision.

Regarding the macroeconomic picture, the IMF’s Resident Representative in Vietnam forecast that Vietnam’s economy will recover more strongly, with an expected growth rate of 6% in 2022 and 7.2% in 2023. However, inflation is expected to increase in the short term.

Based on the analysis of the influence of major economic developments on Vietnam, Dr. Can Van Luc – BIDV’s Chief Economist updated his forecast for 2 scenarios for GDP growth in 2022-2023.

In the base scenario, Vietnam’s GDP will increase from 5.5-6% in this period, in the negative scenario, GDP in 2022 – 2023 will only grow by 4.5-5%. The variables in the above two scenarios will depend on the level of implementation of the epidemic prevention and control program; Program on socio-economic recovery and development 2022-2023; and the ability of Vietnam to mitigate the impact of the Russia-Ukraine war.