Dr. Hồ Hoàng Anh from the University of Economics Ho Chi Minh City (UEH) proposes two key policy suggestions to guide the city's economic agenda.
Two proposals for HCMC in 2024
Firstly, in continuation of the efforts to disburse public investments for stimulating aggregate demand, Ho Chi Minh City is advised to concentrate on policies fostering domestic consumption and encouraging investment in asset accumulation by businesses and households, particularly in the real estate sector. Dr. Anh suggests that the city government should actively support local businesses in organizing discount promotions to invigorate consumer spending. Additionally, efforts should be directed towards efficiently connecting supply and demand, ensuring goods and services reach the appropriate areas and cater to people's needs.
Secondly, diversifying export markets is highlighted as a pivotal policy to drive demand, albeit one that is presently underutilized. Notably, Ho Chi Minh City has untapped potential in markets where Vietnam has signed comprehensive strategic partnership agreements. Dr. Anh points out that Japan (7.16%), Korea (4.31%), and India (1.41%) currently represent a relatively modest share of the city's total export turnover. Given India's robust and steady economic growth, the city government is urged to encourage local businesses to explore partnerships and expand export activities beyond traditional markets like China and the US to mitigate dependence risks.
Emphasizing the importance of aligning short-term policies with the medium-term goal of economic model transformation, Dr. Hồ Hoàng Anh advocates for the development of high-tech industries and banking financial services. He also stresses the need for managing and sustaining a stable real estate market to meet the housing requirements of workers and support production and business activities.
Crucially, Dr. Anh advises against pursuing the 2024 growth target at any cost, cautioning that such a approach may impede the medium-term economic transformation process. The forecast for 2024 anticipates a gradual recovery in Ho Chi Minh City's total demand, with economic growth unlikely to experience a significant breakthrough. The achievement of the 7.1-8% GRDP growth target for 2024 is contingent on a favorable global economic situation, coupled with the city's effective implementation of strategies to boost aggregate demand.
Harnessing Domestic Consumption as a National Strategy for Growth
Dr. Trương Minh Huy Vũ, Deputy Director of the Ho Chi Minh City Institute for Development Studies, emphasizes the crucial role of domestic consumption as a national strategy to support aggregate demand and drive growth. Acknowledging the challenges in swiftly disbursing public investment, Dr. Vũ highlights the need for a strong focus on stimulating domestic consumption, citing successful models in countries like China, Korea, and Thailand where domestic consumption is integral to their national strategies.
However, Dr. Vũ points out a deficiency in the banking industry, noting the limited development of credit channels to support buyers. Drawing from China's experience in 2008, he underscores the importance of aligning credit with the prevailing economic model, whether it is export-driven, real estate-centric, or consumer-focused. By 2024, Dr. Vũ emphasizes the significance of two key issues: the online business model and "buy now, pay later" credit.
Exploring the online business model, Dr. Vũ suggests learning from successful models in China, such as Shanghai and Chongqing, where efficient delivery services are tailored to meet diverse timeframes, ranging from 12 hours to as little as 15 minutes. To realize this, a robust logistics system connected to residential clusters is essential, necessitating a transformation in the nature of grocery stores, markets, and supermarkets. Dr. Vũ envisions that as online business evolves, the banking industry can integrate these developments into credit packages, facilitating the shift towards non-cash payments.
Looking ahead, this strategy not only effectively stimulates aggregate supply in the short term but also lays the groundwork for informed decisions on public investment. As the domestic market develops, neighboring provinces of Ho Chi Minh City can serve as "warehouses" supplying products, prompting public investment to focus on connecting road systems to consolidate these warehouses. This interdependence fosters a mutually reinforcing cycle, propelling sustainable growth.
Adding to the optimistic outlook, Prof. Dr. Nguyễn Khắc Quốc Bảo, Deputy Director of UEH, highlights positive signs for Vietnam's and Ho Chi Minh City's economies in 2024. As world inflation tends to decrease and global interest rates are expected to follow suit, central banks worldwide adopting a trend of loosening monetary policy will create favorable conditions for Vietnam's aggregate demand.
Prof. Dr. Nguyễn Khắc Quốc Bảo anticipates reduced inventories in Europe and the US, leading to increased import demand. This, coupled with the declining point in the shopping cycle domestically, is expected to boost domestic consumption. Despite the pressure faced in 2023, public investment capital is forecasted to continue supporting the economy, with the positive effects likely to manifest more prominently in 2024.
