ADB Country Director for Vietnam Shantanu Chakraborty. Photo: VGP

Shantanu Chakraborty, Asian Development Bank (ADB) country director for Vietnam said that Vietnam's GDP in the first quarter of 2024 is estimated to increase by 5.66% over the same period last year. This is commendable in the context of the current world economy.

According to Country Director of ADB in Vietnam, "GDP growth in the last quarter is a testament to the resilience of the Vietnamese economy. It is one of the best growth rates in the region."

Referring to challenges and risks for the Vietnamese economy in 2024, Shantanu Chakraborty said that external challenges come from instability in the global market due to conflicts in Ukraine and the Middle East.

These challenges are disrupting supply chains and reducing demand for Vietnamese goods, especially for an export-oriented economy like Vietnam.

Besides, the loosening of monetary policy may put pressure on the Vietnamese Dong (VND) in the near future.

Regarding domestic challenges, Vietnam needs to increase consumption combined with fiscal policy to increase the supply of cash in circulation.

In the region, most countries that maintain good growth momentum are countries with developed domestic markets and high domestic consumption. India and Indonesia are typical examples of maintaining good growth with momentum from the domestic market.

ADB Country Director recommended that Vietnam needs to ensure public investment goes in the right direction. The government has set a target of disbursing 95% of more than US$27 billion in public investment by 2024. This target is ambitious but necessary.

"Vietnam needs to develop sustainable infrastructure that is resilient to climate change and resilient in areas such as electricity, roads and logistics to continue attracting foreign direct investment (FDI). Therefore, Vietnam needs to improve the legal environment, and implement necessary policy reforms to ensure quick disbursement," said Shantanu Chakraborty.

Main growth driver of Vietnam's economy in 2024

According to the Country Director of ADB, the main growth drivers of Vietnam's economy in the following months of this year will still be services, manufacturing, FDI and consumption.

The service sector, especially tourism, continues to maintain a high growth rate. According to the latest tourism report, international visitors to Vietnam in the first three months of 2024 reached 4.6 million, an increase of 72% over the same period in 2023, and an increase of 3.2% over the same period in 2019 - the golden year of the Vietnamese tourism industry.

In the coming months, export-oriented manufacturing will still be the pillar of Vietnam's growth.

Despite all challenges, agriculture maintains fairly stable growth at 3.8% due to increased demand for agricultural products globally as well as the fact that Vietnam has signed many free trade agreements with important trading partners.

Besides, FDI plays an important role in Vietnam's economy in the coming time. Accordingly, Vietnam needs to maintain the motivation to attract FDI.

Photo: KT

According to data from the Foreign Investment Agency, in the first 3 months of 2024, Vietnam attracted US$6.17 billion of FDI capital, an increase of 13.4% over the same period in 2023. 2023 is also a record year in both the number of commitments as well as the amount of disbursed FDI capital.

In addition to attracting more FDI into the manufacturing sector, ADB recommends that Vietnam attract more quality FDI into infrastructure, with specific areas such as renewable energy, offshore wind power, economic zones, logistics and road connections.

To promote domestic consumption, Vietnam needs to implement prudent fiscal policy to promote consumption, through the spillover effect of public investment, or through other incentive measures such as extending VAT reduction, or strengthening social security measures, said the ADB Country Director for Vietnam.

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