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Getting Vietnam’s economic growth back on track

Vietnam’s economy emerged from COVID-19 with a surprisingly high 8 per cent annual growth rate at the end of 2022, but took a gloomy U-turn in the first half of 2023, plagued by falling exports due to monetary tightening in the developed world and a slow post-pandemic recovery in China.

Exports were down 12 per cent on-year, trailing off to around 6 per cent towards the latter half of the year. The industrial production index had negative growth of 15 per cent early in 2023 but ended the year with a positive increase of about 1 per cent. As exports constitute 80–90 per cent of Vietnam’s GDP, the poor trade performance resulted in estimated annual growth of around 5 per cent in 2023, over two percentage points lower than the pre-pandemic average.

Monetary policy was loosened throughout the year to support growth, resulting in bank credit growing by…

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