Exports and tourism are forecast to slow down in 2025, so stimulating domestic consumption will be key to maintaining stability and growth.
2025 marks an important period for Vietnam's economy, with the goal of growth GDP 6.5 - 7%. Major financial institutions have raised their 2024 GDP growth forecast to 7% from 6.5%, while continuing to forecast 2025 GDP growth at 6.5%.
Domestic consumption continues to be the key to growth
Despite many challenges ahead, government initiatives and improved consumer sentiment could help sustain growth momentum.
According to VinaCapital experts, the Government has announced many strong measures to support the economy, including increased infrastructure spending and administrative reforms. These efforts are not only meaningful in the short term but also create a foundation for long-term sustainable development.
Although unable to fully offset the slowdown in exports, the above measures still help to strengthen confidence and improve consumer sentiment.
Vietnam’s infrastructure spending is expected to increase by 15-20% by 2025, reaching about $31 billion (equivalent to about 6% of GDP) to complete an additional 1,000km of highways, complete the first phase of the new Ho Chi Minh City airport, and expand the two existing airports in Ho Chi Minh City and Hanoi.
However, a 15-20% growth would require an additional spending of around US$5 billion (or around 1% of GDP), which would not be enough to offset the impact of the decline in manufacturing and tourism. Therefore, additional measures will be needed to sustain Vietnam’s rapid GDP growth next year.
"Consumption accounts for more than 60% of Vietnam's economy, compared to about 25% for manufacturing, so if consumption grows strongly, it will easily offset the decline in export/production/tourist growth next year," said Michael Kokalari, CFA, director of macroeconomic analysis and market research at VinaCapital.
Trade risks and surplus issues with the US
Vietnam currently has the third largest trade surplus with the US, China and Mexico. According to experts, this poses a risk that our country will become a target of the Trump administration's protectionist trade policies if there are no measures to reduce the surplus.
However, Vietnam can minimize risks through free trade agreements (FTAs) signed with major partners such as the EU, Japan, South Korea and China.
According to the forecast of HSBC experts, inflation in Vietnam will remain low in 2025, around 3%, lower than the ceiling target of 4.5% of the State Bank. This allows the State Bank to maintain monetary policy flexible, keeping operating interest rates at 4.5%.
However, Vietnam still faces risks from energy and food prices, especially the impact of African swine fever on pork supply.
Green transformation and digital transformation are two major trends shaping Vietnam’s economic future. However, both sectors require huge investment capital. According to the Ministry of Planning and Investment, state budget capital only meets about half of the investment needs needed to respond to climate change.
"In the long term, Vietnam needs to continue investing in infrastructure, digital transformation and green transformation to maintain its position as one of the most dynamic economies in the region," HSBC experts recommended.
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