 |
Illustrative photo: SGGP |
Up to now, domestic purchasing power has rebounded after a strong decline caused by the Covid-19 pandemic when the country’s economy begins to return to pre-pandemic levels and consumers get ready to resume. Along with that is a significant improvement in the implementation of investment capital from the state budget. Localities have spent approximately VND2,419.5 billion from their state budget on construction and major repair in May 2023, up 4.3 percent over the previous month and up 9.5 percent over the same period.
Meanwhile, in contrast to the decline of industrial production nationwide, the index of industrial production (IIP) of Ho Chi Minh City increased by 1.5 percent in comparison to April) and 5.5 percent compared to the same period last year. In the first 5 months of 2023, the IIP index in the city increased by 1.6 percent over the same period.
The country's merchandise exports were still 6 percent lower than a year ago in May. Imports saw a year-on-year decrease of 18.4 percent, representing a continued decline in imported inputs which indicated that export activities will keep falling in the coming months.
While Ho Chi Minh City maintained a good growth rate with the total export turnover of goods in the first 5 months of the year through the national border gate reaching US$20.7 billion, up 7.9 percent over the same period while the total import turnover of goods in the first 5 months of the year was estimated at $28.4 billion up 11.6 percent over the same period.
Although the State Bank has cut the refinance interest rate from 5.5 percent to 5 percent and the overnight lending rate from 6.0 percent to 5.5 percent, the country's credit growth continues to slow down, decreasing 9.0 percent against the same period in May.
Particularly in Ho Chi Minh City, under the flexible management policy of the State Bank, credit growth tends to be improved. Total mobilized capital of credit institutions in the southern largest city is estimated to reach VND3,262 trillion (US$139,264,467,957) by the end of May, up 0.5 percent over the previous month and up 0.8 percent over the same period last year.
The total credit balance of credit institutions is estimated to reach vnd3,305 trillion by May 31, 2023, up 0.7 percent over the previous month and up 7.2 percent over the same period last year.
Ho Chi Minh City certainly still faces a lot of pressure when the total state budget revenue in the area decreases, while the total expenditure increases, leading to challenges in full budget collection. Therefore, despite significant improvements in macroeconomic control and the growth of key industries, industrial production will continue to slow down in the country generally and in Ho Chi Minh City particularly.
This leads to a shortage of jobs, so policymakers should set out a policy of looking for alternative jobs and activate social protection - a security system that can protect all employees.
In the remaining 6 months of 2023, the government should drastically simplify administrative procedures, remove legal barriers to unleash development as well as clarify why domestic consumption demand is stable and quite sustainable but credit demand is weak and low. Moreover, the government should make it clear why retail revenue always grows well but service revenue declines.
HCMC continues to accelerate the disbursement of public investment capital to support aggregate demand and economic growth in the short term while prioritizing investment in digital and green technology, infrastructure and human resources to promote long-term sustainable development.
