2024: Fiscal policy is the driver of economic growth

Vietnam's economic growth rate in 2024 is forecast to reach about 6-6.5%. This year, fiscal policies, including wages and tax exemptions, will have a positive impact on business households and enterprises.

At the Vietnam Macroeconomic Forum 2024 with the theme: "Vietnam's economy overcomes headwinds" organized by the Banking University of Ho Chi Minh City this morning (January 9), economic experts forecast that in 2024, Vietnam's GDP growth rate will reach about 6-6.5%, the average consumer price index (CPI) growth rate will fluctuate between 4-4.5%.

The above forecasts are made based on an analysis of many aspects affecting the economic growth rate in 2024 globally, and based on actual developments in Vietnam after the end of 2023 with a growth rate of 5.1%, lower than the 6.5% target set by the National Assembly early last year.

Năm 2024: Chính sách tài khóa là động lực tăng trưởng kinh tế

Economic experts comment and forecast on Vietnam's economy in 2024 at the Forum

Synthesizing factors that can have a major impact on the world's aggregate demand in general and Vietnam in particular, the research team of the Banking University of Ho Chi Minh City believes that in 2024, the world's leading economies will still not return to the growth trajectory as before the Covid-19 pandemic. Poor countries will become poorer with an estimated income deficit of about 6.5%.

In 2024, geopolitical conflicts will continue to escalate, fragmenting and negatively affecting the global economy. In addition, due to the impact of climate change, the weather in many regions of the world will be more severe, significantly affecting profits from agricultural production activities, property losses and increasing insurance costs.

As for Vietnam, the difficulties of the real estate market and corporate bonds will continue in 2024. Vietnam will also be one of the countries most affected by the global minimum corporate tax (GMT) officially applied from the beginning of this year.

With such not-so-optimistic colors, experts believe that this year, monetary policy will likely be proactively and cautiously managed by the regulatory agency, ensuring that it does not put too much pressure on the inflation index.

Meanwhile, the fiscal policy group will have ample room to become the key driver of domestic demand.

Specifically, “the adjusted wage policy will have a significant impact on GDP growth. Public investment in 2024 will also accelerate. Temporary tax deferrals, cuts in environmental taxes, value-added tax and car registration will also bring positive impacts to households and businesses,” the report said.

Also at the forum, economic experts said that in 2024, the global energy crisis could become more serious, causing the price of imported energy to increase. Currently, Vietnam is a net importer with a large import of commodities such as coal, oil and in the near future, liquefied natural gas. Therefore, if there are no timely solutions to promote the development of renewable energy and reduce dependence on imports, the economy will face energy inflation.

Regarding the inflation rate, international financial organizations such as IMF, WB, ADB all forecast that in 2024, Vietnam's inflation rate will fluctuate around 3-4%. Experts believe that the main driving force of inflation will be cost-push. Meanwhile, demand-pull inflation may arise due to the acceleration of public investment disbursement, putting pressure on construction material prices. Consumer demand may increase but will not increase dramatically to the point of putting strong pressure on prices.

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