ADB forecasts Vietnam's economy to grow 6% and warns of some risks

The Asian Development Bank (ADB) forecasts Vietnam's economic growth to reach 6% in 2024, higher than previous figures, but still warns of some risks.

At a press conference this morning (April 11), the Asian Development Bank (ADB) forecast that Vietnam's economy will grow by 6% in 2024 and 6.2% in 2025.

The Asian Development Outlook (ADO) report of ADB shows that Vietnam's economic growth this year is positive despite prolonged instability from the external environment. (Illustration photo)

According to ADB, weak global demand and high international interest rates have hampered Vietnam’s growth in 2023. However, a timely shift to a pro-growth monetary policy is one of the key measures to help the economy get back on track. Large-scale public investment this year will continue to restore growth. Inflation is expected to pick up along with the economic recovery. The key policy challenge is to improve the efficiency of public investment to stimulate growth in the short term and create a foundation for development in the long term.

A relatively comprehensive recovery in export processing industries, services and stable performance of the agricultural sector are expected to support Vietnam's recovery momentum.

Positive foreign direct investment (FDI) and remittance inflows, sustained trade surplus, recovering domestic consumption, and continued fiscal stimulus with a substantial public investment program are seen as key to boosting growth in 2024.

Public investment remains a driving force for Vietnam's economic growth (Illustration photo: KT)

Mr. Shantanu Chakraborty, ADB Country Director for Vietnam, shared: Vietnam’s economy is expected to grow at a solid pace this year and next year, despite a challenging global environment. However, global geopolitical uncertainties and structural constraints in the domestic economy could affect this outlook.

ADB recommends that to boost growth, Vietnam needs stronger measures to address domestic structural weaknesses, including the heavy dependence on FDI enterprises on export processing industries, weak linkages between export processing industries and the rest of the economy, immature capital markets, over-reliance on bank credit, and complex legal barriers for businesses.

Public investment remains a driver of Vietnam’s economic growth, and effective implementation of public investment is critical to promoting growth. While the Government has taken a number of measures to accelerate public investment and improve implementation, more systematic measures are needed to improve legal and regulatory processes to reduce barriers to effective project implementation.

Weakening global demand due to slow economic recovery and delayed interest rate normalization in the United States and other advanced economies, coupled with ongoing geopolitical tensions, could hamper a full recovery of Vietnam's export-led growth in 2024, noted ADB Country Director for Vietnam Shantanu Chakraborty.

To boost growth, ADB recommends stronger measures are needed to address domestic structural weaknesses such as heavy dependence on FDI enterprises on export processing industries, weak linkages between export processing industries and the rest of the economy, nascent capital markets, over-reliance on bank credit, as well as complex legal barriers for businesses.

Source: https://baolaocai.vn/adb-du-bao-kinh-te-viet-nam-tang-truong-6-va-canh-bao-mot-so-nguy-co-post382641.html