[NEWS] – ’Increasing resistance’ for the economy 2023

As a highly open economy, every time the world "sneezes, runny nose", Vietnam’s economy is prone to "flu". In 2023, the world economy is forecasted to be at risk of entering a short-term recession, and Vietnam is considered to suffer many "headwinds".

In 2022, amid a volatile macro environment, Vietnam will still become a bright spot in the world when its economy will grow by 8%, and import and export turnover will reach more than 730 billion USD, the highest level ever. Even so, the economy still has tumors that need major surgery. The capital market is likened to the "blood vessel" of the economy, but under the influence of external forces and internal inadequacies, there have been times of congestion causing "convulsions" for the economy.

According to the Ministry of Finance, the size of Vietnam’s capital market has grown by an average of 28.5% in the 2016-2021 period, becoming an important capital mobilization channel for businesses. By the end of November 2022, the size of Vietnam’s capital market will reach about 105% of the GDP in 2021. Which, the stock market capitalization will reach 64% of GDP; bonds account for 41% of GDP (in which corporate bonds (Corporate bonds) reach 15% of GDP).

However, the handling of violations related to the issuance of "3 no’s" bonds of Tan Hoang Minh and Van Thinh Phat, the situation of inflated stock prices of "they" FLC and "they" of the Louis family, etc. The false information has negatively affected the market and investor sentiment. Investors seem to lose confidence in the corporate bond market, causing the amount of newly issued bonds of enterprises to "freeze", while the capital demand for operation and cash flow to reverse debt is very large.

According to statistics, the volume of corporate bonds maturing from 2023 to 2025 is more than 700,000 billion VND (not including interest). Which, the majority is of real estate enterprises, causing the risk of default if there is no appropriate and timely solution. Not to mention, the relationship between "banks - securities - real estate" can cause this "debt bomb" to spread.

In 2023, Vietnam’s economy is forecasted to grow by 6-6.5%. Which, export is forecasted to increase by 8-10%; investment (domestic and foreign) increased by about 8%, and final consumption increased by about 9-10%.

In particular, while the capital mobilized by bonds faces difficulties, the Government needs to ensure the safety of the banking system. In particular, it is necessary to have a solution to deal with weak banks soon, so as not to let the risk spread between securities, real estate, and banks. The Ministry of Finance and the State Securities Commission should soon develop new derivative securities products to diversify products and attract domestic and foreign investors.

Regarding solutions to maintain stability, ensure large balances, and firmly overcome challenges, Prime Minister Pham Minh Chinh asked ministries and branches to drastically implement the urged instructions. With monetary policy, the Prime Minister proposed the State Bank to ensure the balance; between growth and inflation; a balance between interest rates and exchange rates; operate monetary policy firmly, flexibly, and effectively.

Regarding fiscal policy, the Prime Minister asked the Ministry of Finance and its units to focus on focused and key solutions.

“In the current difficult context, the goal is not to increase revenue but to collect correctly, fully and timely; have policies to relax taxes and fees, support businesses, and save maximum expenses," the Prime Minister said, and suggested that these two policies need to support and combine flexibly and effectively. However, in any case, it is necessary to ensure the legitimate interests of people, businesses, and related subjects.

Regarding monetary policy, Mr. Pham Thanh Ha, Deputy Governor of the State Bank said that in 2022, the goal of economic stability and inflation control will certainly be achieved. However, the data on headline inflation and core inflation tends to increase in the coming time. With that development, to control inflation in 2023 and stabilize the macro-economy, the State Bank will stabilize the currency and foreign exchange markets, and ensure the liquidity of the credit institutions system.

Specifically, the State Bank will rationally and synchronously manage both interest rates and exchange rates, target credit growth reasonably with market movements and macroeconomic developments, and closely coordinate with the State Bank of Vietnam. fiscal and other macroeconomic policies.

According to the Ministry of Planning and Investment, in 2023, the National Assembly approved the plan at the beginning of the year with a total capital of over 700 trillion VND, an increase of 25% compared to the 2022 plan (about 140 trillion VND). In particular, in 2023, it is also required to disburse the entire capital of the Socio-Economic Development and Recovery Program.

The leaders of the MPI also said that to accelerate public investment, it is necessary to clearly define and define the responsibilities of organizations and individuals in the implementation, while strictly controlling the object.

Source: Collector