In the unfavorable scenario, HIDS assumes that in 2023, the zero-Covid policy and real estate crisis in China would affect supply-demand and increase inflation, while a global recession plus monetary policy tightening in some large economies will lead to lower consumption.

These factors, coupled with the Russia-Ukraine conflict, which has caused a petrol shortage and global inflation, will cause prices of goods in the domestic market to increase.

Regarding the growth of economic sectors, the poor performance of the real estate market would cause businesses to hesitate to invest. Consumer goods price increases and lower incomes of workers caused by production downsizing and labor layoffs would also lead to a sharp fall in purchasing power.

Regarding investment capital, the stock and monetary markets with negative performance would affect loan access of businesses. State revenue would not be as high as expected and the disbursement of public investment projects would be affected.

In the favorable scenario, inflation rates in some countries that are large trade partners of HCM City would be controlled, and the Russia-Ukraine conflict would become less tense and China would change its zero-Covid policy.

If so, enterprises would have more opportunities for orders, and production and labor demand would rise. In this case, the petrol supply would be stable and prices controlled, thus helping to boost domestic purchasing power.

According to HIDS, the basic scenario is the most feasible.

With that scenario, the zero-Covid policy would be loosened, and foreign travelers would come back to HCM City, helping the service sector recover strongly. If the Russia-Ukraine war becomes less tense, petrol supply would be stable.

The city’s economy would continue its upward trend and reach a growth rate equal to that before the pandemic, about 7.5 percent.

In related news, according to HCM City’s draft report on socio-economic development to the Government Office, the city would obtain 8 percent growth rate of GRDP (Gross Regional Domestic Product) in 2023, while total investment capital would be 35 percent of GRDP.

Tran Chung