Vietnamese economy 2024: Challenges intertwined with growth opportunities

The Vietnamese Government's determination to overcome difficulties and devise strong support solutions will be factors which have a positive impact on economic growth this year, while also creating momentum for progress in the medium term, according to international organisations and economic experts.

The Vietnamese economy is forecast to see bright prospects in 2024

Amid a difficult international economic context, the Vietnamese economy in 2023 continued to show clear signs of recovery.

The nation's GDP last year recorded an estimated growth rate of 5.05%. Although it failed to meet the set target, this is still considered a positive number amid global economic difficulties.

Nguyen Thi Huong, general director of the General Statistics Office (GSO), stated that agro-forestry- fishery production continued to be a solid pillar of the national economy, with the export turnover of several agricultural products having increased, coupled with stable development and aquaculture thanks to the application of high-tech models which brought about greater economic efficiency.

Most notably, industrial production in 2023 followed a positive trend, especially in the last months of the year, with vibrant trade and service activities maintaining a high increase compared to the previous year.

Despite the national economy last year growing modestly and at a low level compared to the 2022 level of 8.02%, this still represents a higher growth rate than many countries in the region and throughout the world.

Bright prospects for Vietnamese economy in 2024

Credit rating agency Fitch Ratings recently issued an optimistic forecast for Vietnamese economic growth for this year and ahead to 2025.

Specifically, Fitch Ratings reports that Vietnamese domestic financial and monetary policies have greatly supported the economy. Indeed, Fitch forecasts that national economic growth is likely to reach 6.3% in 2024, rising to 7.0% by 2025.

According to the latest Asian Development Outlook (ADO) Report published by the Asian Development Bank (ADB), Vietnamese economic growth this year will be maintained at 6%. Elsewhere, the International Monetary Fund (IMF) also predicted that the country will rank 20th in the world with a growth rate of 5.8% in 2024.

Regarding the Socio-Economic Development Plan for 2024, the 15th National Assembly has set a GDP growth target of 6% to 6.5%, along with an average CPI growth rate of 4% to 4.5%.

​Talking to VOV, Tran Van Lam, member of the National Assembly's Finance and Budget Committee, said that in the current context setting a growth target of 6% to 6.5% is feasible as the three growth pillars of exports, investment, and consumption are all showing positive signs.

In line with this, the domestic market's demand is also indicating signs of recovery, with a large amount of money from the stimulus support package being injected into the national economy as a means of boosting production and consumption. Public investment will still be disbursed, albeit slowly, with private investment expected to recover, he continued.

Regarding consumption, this year will see the country implement wage reform, which will also create greater demand to provide a platform for the economy to grow stronger than in 2023.

"If there are no adverse or sudden factors, the growth target set for 2024 are completely achievable," Lam emphasized.

Proper countermeasures needed

Besides expectations, economic challenges in the year ahead are currently obvious as fierce conflicts are taking place in many areas, the global supply chain for spare parts and exports is still broken, whilst major countries are intensifying protectionist measures. This already had a clear impact on the nation in 2023, with this showing no signs of ending this year.

Associate Professor. Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics

According to many experts, more than 30 years after the 1986 reform, this is the most difficult period for the Vietnamese economy.

Associate Professor. Dr. Tran Dinh Thien, former director of the Vietnam Institute of Economics, said that the Vietnamese economy is living irrationally. The country is a large open market with more than 200% of GDP, but exports mostly come from the FDI sector. The rate of businesses withdrawing from the market has reached several dozen percent, while the number of newly-established firms is increasing with the speed falling, he pointed out.

The newly-established and registered businesses have not created value or contributed to GDP growth, whist newly-registered businesses can be "virtual" because the current business registration policy is open, with many forms of setting up businesses for auction, invoice revolving, fraud, and tax evasion, all of which are harmful to the real economy, Thien added.

Prof. Dr. Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee

According to Prof. Dr. Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee, the factors affecting the economy in the 2022 to 2023 period were clearly recognised. This year, if GDP is to grow, these weaknesses must be resolved, potentially resulting in growth even higher than the set target of 6% to 6.5%.

Prof. Dr. Cuong emphasised that now is the time to find solutions to overcome negatives factors and limitations. Hopefully this year the Government, ministries, sectors, and localities will "look straight at the problem" and move to adopt reasonable policies aimed at giving ample room for higher and better growth in order to realise the goals of the socio-economic development plan for the 2021 to 2025 period.

VOV