Specifically, reporting “Review – Update on Vietnam’s economic situation” The April 2024 edition of the WB in Vietnam on April 23 pointed out that exports are recovering, domestic consumption and private investment are also on the rise. Real exports are expected to grow 3.5% in 2024, reflecting a gradual improvement in global demand. In addition, the real estate sector is expected to recover stronger later this year and next, boosting domestic demand as investors and consumers gradually regain confidence.
Underscoring the importance of continuing to support the economy through fiscal policy to underpin the recovery, the report recommends accelerating the pace of implementation of infrastructure investment projects funded by public resources. This would help stimulate the economy further, with the potential for GDP growth of 0.1% for every 1% increase in public investment as a proportion of GDP. Meanwhile, in terms of monetary policy, the room for further interest rate cuts is limited due to the interest rate difference between domestic and international markets.
According to the report, with budget revenues likely to continue to be weak while public spending is boosted, including planned salary increases for civil servants and accelerated public investment, the budget deficit is expected to increase. increasing to 1.6% of GDP in 2024, before decreasing to 1.1% in 2025, in line with the Fiscal Strategy 2021-2030.
The report also stated that ensuring the stability of the financial sector is still the most important thing, focusing on managing potential risks related to increased bad debt, including the cause due to the value of the financial sector. decrease in real estate market. The capital buffers of commercial banks are currently relatively thin and the decline of the real estate market may cause these banks’ capital resources to decline further.
“Investing in public infrastructure projects creates many long-term external benefits,” said Mr. Sebastian Eckardt, World Bank East Asia and Pacific Regional Director for Macroeconomics, Trade and Investment. in addition to immediate economic stimulation. Efforts to strengthen public investment management will also address critical infrastructure bottlenecks in energy, transportation and logistics, which are fundamental to Vietnam’s long-term economic growth.”
The report’s special topic provides recommendations to support innovative startups that contribute to Vietnam’s productivity growth. The report highlights the need for a more enabling environment as significant structural barriers persist across sectors. These include regulatory barriers, growing skills shortages, low technology uptake and challenges in accessing early-stage financing.
To nurture innovative businesses, Vietnam can innovate its key ecosystem support program (Program 844) towards building investment-ready businesses. This activity includes improving support mechanisms and creating favorable conditions for private fund managers to establish domestic investment funds; Enhance the capacity of ecosystem stakeholders such as incubators and support for idea development.
In particular, Vietnam needs to simplify regulations and accelerate reforms to resolve legal barriers for domestic investment funds; create favorable conditions for investment from outside into Vietnam and vice versa, especially investment in innovative start-up businesses.
In addition, Vietnam needs to increase the contribution of academia and public research. Create conditions for universities and public research organizations to contribute to start-up companies, through incubators, idea development support, and innovative start-up training centers (model public-private partnership).
The report also states that the public research sector can play a greater role by modernizing the intellectual property and technology transfer framework. Actively reward research efforts with commercial potential; Build the capacity of universities and research organizations to effectively transfer technology to startups.
