With a recovering economy in 2023, Vietnam has earned upbeat growth projections from international organisations for this year.
The government last week released a remark that the domestic economy’s growth is strongly recovering quarter after quarter. After ascending 3.32 per cent on-year in Q1 2023, it bounced back to 4.14 per cent on-year in Q2, 5.33 per cent on-year in Q3, and 6.72 per cent in Q4.
The rate for the whole year was 5.05 per cent, meaning the economy has a scale of about $430 billion.
“This has listed Vietnam in the groups of nations with the high growth in the region and the wider world. Many prestigious international organisations have highly appreciated the economic achievements and prospects of Vietnam,” said Deputy Prime Minister Le Minh Khai.
Last week, Standard Chartered Bank released its fresh forecast that Vietnam will enjoy robust GDP growth of 6.7 per cent in 2024 (6.2 per cent in H1 and 6.9 per cent in H2).
“Vietnam continues to offer a promising medium-term outlook.” said Tim Leelahaphan, economist for Thailand and Vietnam of Standard Chartered, “To maintain rapid growth and competitiveness, Vietnam needs to upgrade infrastructure and prepare to lower carbon emissions.”
According to Leelahaphan, retail sales and industrial production have stayed robust despite the recent moderation. Exports and imports are starting to recover, though electronics-related trade remains tentative.
Last month, credit rating agency Fitch Ratings released its prediction that Vietnam’s growth rate in the medium term may reach about 7 per cent, with many favourable signs.
Fitch Ratings said Vietnam’s cost competitiveness, educated workforce relative to peers, and entry into regional and global free trade agreements bode well for continued strong foreign direct investment (FDI) inflows amid global supply chain diversification.
The agency upgraded Vietnam’s long-term foreign-currency issuer default rating to BB+ from BB, with a “stable” outlook.
“The upgrade reflects Vietnam’s favourable medium-term growth outlook, underpinned by robust FDI inflows, which we expect will continue to drive sustained improvements in its structural credit metrics,” the agency wrote. “We have increasing confidence that near-term economic headwinds from property-sector stresses, weak external demand and delays in policy implementation owing to a corruption crackdown are unlikely to affect medium-term macroeconomic prospects and that policy buffers are sufficient to manage near-term risks.”
DPM Khai stated that in the Asia-Pacific region, Vietnam is among only two of 62 nations receiving the upgrade from Fitch Ratings. The Vietnamese brand value has reached $431 billion, up one rank to 32 out of 100 strong national brands with the most rapid value growth in the 2020-2022 period.
In the January-December 20 period of 2023, Vietnam wooed a total of $36.6 billion in newly registered capital, newly added capital, and capital contribution and stake acquisition, which was up 32.1 per cent as compared to 2022. In 2023, total disbursed FDI is estimated to hit nearly $23.2 billion, up 3.5 per cent on-year.
“This is the highest disbursed FDI sum over the past five years, demonstrating the fact that Vietnam continues being an attractive destination for foreign investors and the spillover effects of the country’s diplomatic policy,” Khai noted.
Many international organisations have set a positive economic growth target for Vietnam in 2024, including the International Monetary Fund (5.8 per cent), the World Bank (5.5 per cent), the Asian Development Bank (6 per cent), Moody’s (5.6 per cent), and Fitch Solutions (5 per cent).
“Given that global economic growth is expected to continue slowing in 2024, Vietnam’s GDP growth target of 6-6.5 per cent for 2024 is ambitious,” said Andrea Coppola, lead economist for the World Bank in Vietnam. “Despite the global slowdown, demand for Vietnamese exports could gradually improve and we project economic growth to slightly accelerate, but it will be challenging to reach 6 or 6.5 per cent unless domestic demand, consumption and investment accelerate further.”
While the nation hopes that the demand for Vietnamese exports from the rest of the world to recover in 2024, it will not be as strong as in the past and this challenging situation may last for some time, Coppola added. “In this context, my message for Vietnam is to leverage its internal strength and boost the productivity growth of its domestic economy to transform the challenges provided by the global economic slowdown into an opportunity to further strengthen its economic growth model.”
Source: CCIPV / VIR