Market Economy Recognition Boosts Vietnam's Global Standing
	WB: Vietnam's Economy Growth to Reach 6.1% in 2024

On September 25th, the Asian Development Bank (ADB) released its Asian Development Outlook (ADO) for September, maintaining its forecast for Vietnam's economic growth in 2024 and 2025.

ADB experts say Vietnam's economy continues to maintain growth momentum, despite global uncertainties. Photo: VNP

GDP projected to grow at 6%

Speaking at a press conference, ADB Country Director for Vietnam Shantanu Chakraborty commented on the current economic state for the S-Shaped Land.

"Vietnam's economy has rebounded strongly in the first half of 2024 and is expected to maintain its growth momentum despite global uncertainties. The robust recovery is driven by improved industrial production and strong growth in trade."

ADB Chief Economist Nguyen Ba Hung explained that the industrial sector continues to be the main driver of growth, as external demand for key export electronic products contributes to increased production. Vietnam's economic recovery is also supported by the recovery of the service sector, and stable agricultural output. However, weak domestic demand and challenging global economic prospects add to uncertainties.

The report highlights that the recovery of trade and positive FDI inflows will be key growth drivers. In the first eight months of 2024, exports and imports have rebounded strongly, increasing by 15.8% and 17.7%, respectively, compared to the low base of the same period in 2023. However, ongoing global and regional supply chain restructuring uncertainties have impacted trade prospects. Exports and imports are projected to grow by more than 10% this year and slightly higher next year, driven by the gradual recovery of external demand.

Vietnam's economic recovery is also supported by the rebound of the service sector and stable agricultural output. Other sectors are expected to grow at a more modest pace. The service sector is projected to continue growing at 6.6%, driven by the recovery of tourism and related services.

The industrial sector continues to be the main driver of growth. Photo: VNP

With these positive signs, the ADB forecasts a positive economic growth for Vietnam, with an estimated GDP growth of 6% in 2024 and 6.2% in 2025.

Balanced combination of monetary and fiscal policies

Conversely, the ADO report also highlights several risks that could slow down Vietnam's growth. Among these are weak external demand in some major economies, while geopolitical tensions, rising protectionism, and uncertainties related to the American presidential elections could fragment trade, negatively impacting exports, production, and employment.

Externally, a slow economic recovery outlook could continue to limit demand, negatively impacting exports, production, and employment. Vietnam's exports face increasing competition due to trade shifts from global value chain restructuring in products such as garments, textiles, and electronics, as well as risks from escalating geopolitical tensions, and growing protectionism.

According to Nguyen Ba Hung, to sustain growth in 2024 and 2025, maintaining macroeconomic stability through a more balanced mix of monetary and fiscal policies is crucial, coupled with comprehensive public administration reforms. Weaker-than-expected external demand necessitates continued policy measures to stimulate domestic demand and business activities.

Shantanu Chakraborty also noted that while the aftermath of Typhoon Yagi was significant, its economic impact was not as severe, and it presented an opportunity for renewal. He recommended that the government accelerate public investment disbursement and implement supportive policies to boost the economies of localities affected by the storm. Currently, public investment disbursement remains slow and falls short of the government's target of 95%. However, public investment disbursement is often accelerated towards the end of the year, which will be a key driver for economic growth this year.

The ADB expert also recommended that Vietnam's monetary policy should continue to focus on both price stability and supporting growth, although policy space is limited. However, the risk of rising non-performing loans due to the continued extension of debt restructuring regulations limits the scope for further monetary easing. Any additional monetary easing measures should be closely coordinated with expansionary fiscal policy, along with accelerating institutional reforms to support the economy.

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