Revitalising aggregate demand should be the focus in order to boost growth: experts

Việt Nam's economic prospects for 2024 involve revitalising aggregate demand, promoting sustainable growth, and improving the investment environment to drive longterm development.

A national scientific seminar titled "Việt Nam Economy in 2023 and Prospects for 2024" was held in Hà Nội on Wednesday. The seminar, organised by the National Economics University (NEU) in collaboration with the Party Central Committee's Economic Commission, marked the release of the annual publication "Việt Nam Economic Assessment 2023" under the theme "Promoting Aggregate Demand for Economic Growth in the New Context."

During the seminar, experts assessed the current state of aggregate demand and its components, identified achievements, limitations, and underlying causes. They also evaluated the contributions of different factors to economic growth and proposed directions and policy recommendations for economic management in 2024 and beyond, with a focus on promoting aggregate demand and ensuring sustainable economic growth in the changing landscape.

Professor Phạm Hồng Chương, rector of the National Economics University, emphasised the challenges faced by the Vietnamese economy in 2023. He highlighted the difficulties arising from global economic slowdown, high global inflation, tightened monetary policies in many countries, and increased geopolitical tensions. These factors led to lower economic growth rates compared to the preCOVID-19 period, particularly due to weakened aggregate demand, consumption, and investment, as well as a lack of improvement in growth quality. Aggregate demand plays a vital role in determining economic activity, employment levels, and overall growth. A decline in aggregate demand indicates the risk of an economic recession, impacting industrial production, employment rates, and people's income and expenditure.

To address these challenges, the Government and relevant entities must promptly implement appropriate measures to strengthen the drivers of recovery and create conditions for economic development in the new context. Restoring aggregate demand is essential for Việt Nam's economic stability and growth.

Dr. Nguyễn Đức Hiển, deputy head of the Party Central Committee's Economic Commission, emphasised the decline in aggregate demand, which affected all three components: investment, exports, and consumption. Social investment in 2023 saw a modest increase of 6.2 per cent compared to the previous year. State sector investment from the budget reached only 85.3 per cent of the annual plan, while non-state sector investment and foreign direct investment (FDI) also experienced slower growth.

Furthermore, both exports and imports witnessed significant declines in 2023, attributed to reduced demand from major markets such as the US, ASEAN, the EU, and certain East Asian countries. Consumer spending also decreased, with retail sales of goods and consumer service revenues growing at a slower rate compared to the previous year.