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October 12, 2023

Vietnam Economy - Modest Recovery in Q3 but Expecting to Miss the 2023 Growth Target

Saigon, Vietnam
October 12, 2023

Vietnam’s economy experienced a modest recovery in the third quarter of this year, with 5.33% GDP growth, up from 4.05% in second quarter. This recovery is due to increased foreign investment and an 80% rebound in tourism, thanks to new e-visa policies and an extended visa-exemption list. In the first 9 months of 2023, Vietnam attracted US$20.21 billion in FDI, a 7.7% year-on-year increase. By the end of September, investments had been made from 144 countries and territories, supporting projects worth over US$455 billion in Vietnam.

However, for the first nine months of 2023, GDP growth reached only at 4.24%, a notable decline from 8.85% in the same period of 2022. During a meeting of the National Assembly Standing Committee on October 16, both the Chairman of the National Assembly’s Economic Committee and the Minister of the Ministry of Planning and Investment predicted that GDP growth could not reach the government’s original target of 6.5% for 2023, instead projecting it to be 5% for the year.

In the first nine months of 2023, Vietnam recorded a trade surplus of US$21.68 billion. Exports in September rebounded after six consecutive months of decline, and imports also increased by 2.6% following a ten-month decline. However, for the overall nine-month period, Vietnam saw an 8.2% drop in exports and a 14% decrease in imports compared to the same period last year. Major export products, such as phones and components (down 13%), machinery equipment and tools (down 10.5%), textiles (down 12%), and footwear (down 18%), all saw double-digit declines in the first nine months of 2023 compared to 2022. In terms of trade with the U.S., according to the U.S. Census Bureau, Vietnam exported US$73 billions of goods to the U.S. in the first eight months of 2023, a 16% decrease from the same period the previous year.

The inflation rate is contained at 3.7% in September, below the government’s 4.5% target. However, rising food prices can pose a risk to monetary stability in Q4. To foster trade, control inflation, and enhance economic activities in Q4, Vietnam’s government seeks to reduce taxes, cut prices, and leverage US-Vietnam Comprehensive Strategic Partnership.

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