According to the HCM City Statistics Office, the city’s IIP increased by 4.2 percent in October compared to the same month in 2021, but fell by 3.1 percent over September.

Bui Ta Hoang Vu, director of the HCM City Industry and Trade, said at a meeting on November 2 that IIP (the index of industrial production) reduction shows difficulties for Vietnam’s exports, especially textiles-garments, and wooden furniture. Vietnam’s exports have been impacted by high inflation in importing countries and disruption of supply chains.

“As the export markets have narrowed, local firms are boosting domestic sales. They are seeking markets to maintain production and ensure jobs for workers,” Vu said. 

Expert Tran Du Lich emphasized the importance of discipline in the finance and real estate markets for the medium and long term. However, while it is good to make the market healthy, it may have an unfavorable impact in the short term, especially on investors’ psychology.

The State Bank of Vietnam (SBV) has indicated two goals – controlling inflation, maintaining the value of the VND, and boosting growth, and slashing interest rates. 

The current priority is controlling inflation, maintaining the value of the VND and the stable foundation of the banking system. Lich predicted that capital flow would slow down, creating effects in 2023-2024.

Lich said the support packages for economic recovery in HCM City need to be deployed more actively, especially the 2-percent interest rate subsidy program, which is going slowly.

HCM City needs to work with SBV and the Ministry of Finance (MOF) to keep a close watch and settle problems arising in the financial market, especially the bond market to ensure stable operation of the banking system and fuel capital to the finance and real estate markets.

Influencers on socio-economic development

Truong Minh Huy Vu, a member of the HCM City Policy Advisory Group, said the city needs to face facts and recognize that the situation has been worsening since September because of the handling of violations of some groups and banks; and pressure on bond debt payments, especially bonds issued by real estate firms. It is estimated that VND150 trillion corporate bonds will mature in the first half of 2023.

Vu suggested that HCM City needs to restore market confidence in its management capability. Within its jurisdiction, the city can cooperate with MOF and the central bank to make large bond issuers’ activities more transparent.

The HCM City People’s Committee can jointly collect and verify information to calm the market down. He suggested establishing an inter-ministerial group with the participation of representatives from MOF, SBV and the Ministry of Information and Communications (MIC) to clarify information. 

“HCM City needs to propose the government and relevant agencies to analyze and provide detailed data on the national financial and monetary situation, and the current payment balance to define time and method to handle violations, if any, at major enterprises in the city,” Vu said.

HCM City Chairman Phan Van Mai said the city recorded gross domestic product (GDP) growth of 9.97 percent in January - October 2022 and it is likely to get the targeted rate of 9.44 percent for 2022.

However, he warned of impacts of the world economy’s GDP growth reduction, inflation increase and high interest rate on the city’s economy. HCM City’s consumer price index (CPI) is relatively high, at 4.81 percent.

Tran Chung