At the end of the third quarter, Vietnam's economy recovered relatively well amid optimism about the overall growth of the world economy in late 2024 and 2025.
Growth Vietnam's economy in the third quarter and nine months is estimated to have grown by 7.4% and 6.82%, higher than expected, in the context that some localities in the northern provinces were significantly affected by storm Yagi (storm No. 3).
Opportunities and challenges intertwine
In the recently published Economic Report for the Third Quarter - Prospects and Challenges, the Vietnam Institute for Economic and Policy Research (VEPR), University of Economics, Vietnam National University, Hanoi stated: GDP growth after 9 months reached 6.82%, an increase of more than 1.5 times compared to 4.4% in the same period last year with the main contribution from the industrial and service sectors.
On the aggregate demand side, trade is recovering and capital flows are foreign investment (FDI) is the main growth driver. Import and export of goods increased faster than expected, with a trade surplus of 20.8 billion USD, a fairly positive trade surplus in the 2020-2024 period.
State budget revenue exceeded the plan while public spending decreased compared to the same period, leading to a continued high budget surplus, creating room for continued fiscal policies in 2024 such as tax exemption, extension, and reduction policies, especially in the context of industries and sectors suffering damage from Typhoon Yagi (Typhoon No. 3).
The rate of growth of money supply and credit growth recovered quite well, contributing positively to promoting growth and investment, although still lower than the average before the Covid-19 pandemic.
However, VEPR also pointed out the risks and challenges that the Vietnamese economy will face in the coming time. According to Dr. Nguyen Quoc Viet, Deputy Director of VEPR, the risks and challenges include the purchasing managers index (PMI) declining and falling below 50 points in September.
The rate of enterprises withdrawing compared to enterprises entering the market remains high. Domestic consumption and public investment disbursement not achieved as expected
Looking further, the trend of global economic and political fragmentation; extreme weather events due to climate change may cause external demand to decline. Push costs pose many challenges to export competitiveness and the ability to participate more deeply in the global value chain...
In the Report on Vietnam's economy in the first 9 months of 2024, forecast for the whole year 2024-2025, Dr. Can Van Luc and the author group of the Institute of Training and Research of the Bank for Investment and Development of Vietnam (BIDV) presented 7 bright spots in the picture of Vietnam's economy in the first 9 months.
That is, the National Assembly and the Government should step up institutional improvement, make efforts to remove difficulties and bottlenecks in the economy; promptly overcome the consequences of Typhoon Yagi, stabilize people's lives, restore production and business, promote growth, and control inflation.
The economy continues to recover positively, with growth in each quarter higher than the previous quarter; the macro economy is basically stable, inflation is controlled at an appropriate level; the basic interest rate is stable, the exchange rate has cooled down, contributing to supporting people and businesses; credit is gradually recovering, and bad debt is increasing under control.
State budget revenue increased significantly along with the recovery of production, consumption and import-export; the business situation improved a lot, foreign affairs and international integration activities continued to be promoted, thereby continuing to enhance Vietnam's international position and reputation, creating opportunities to promote economic, trade, investment and tourism cooperation, developing new fields such as digital economy, green economy, science and technology, semiconductor industry...
In addition, the Report also pointed out 6 main risks and challenges in the fourth quarter of 2024 and 2025. Those are risks and challenges from outside still exist; traditional growth drivers recover but are not uniform, still at a low level compared to before the pandemic and are not sustainable.
Institutions for the growth driver New regulations are still slow to be issued compared to development requirements; business operations still face many difficulties although they have eased; bad debts are increasing and there are still problems in handling them; restructuring the economy, including state-owned enterprises and weak credit institutions, is still slow compared to requirements.
Growth forecast scenarios
Forecasting Vietnam's economic growth in 2024 and 2025, Dr. Can Van Luc and the group of authors from the Institute of Training and Research stated that with the baseline scenario, Vietnam's economy could achieve a growth rate of 6.8-7% in 2024, an increase of 0.3 percentage points compared to the forecast in June 2024 or possibly better.
This forecast is based on the world economic recovery momentum, along with Vietnam's positive socio-economic development results in the first 9 months and the Government's strong efforts and determination; the confidence of businesses and people has been strengthened, and production and business activities have been restored soon after Typhoon Yagi.
The Research Team also presented a positive scenario with GDP growth possibly reaching more than 7% and a negative scenario with GDP growth reaching lower levels, at 6.6-6.8%.
To achieve the annual growth target of 6.5%, the fourth quarter needs to grow by 5.7%; to achieve the annual growth target of 6.8%, the fourth quarter needs to grow by 6.76%; to achieve the annual growth target of 7%, the fourth quarter needs to grow by 7.5%. With positive growth results in the third quarter and assessments of growth trends in the final months of the year, economic growth for the whole year of 2024 is likely to achieve the growth scenario target. Director General of Statistics Nguyen Thi Huong |
According to the Research Group's calculations, to achieve a growth rate of 6.8-7% in 2024, GDP in the fourth quarter needs to increase by 6.8-7.8%. By 2025, continuing the high growth momentum of 2024, the driving forces continue to be promoted, and it is forecasted that Vietnam's GDP growth could reach 6.7-7%, equivalent to 2024.
Meanwhile, in the VEPR Report, the group of authors updated two scenarios for Vietnam's economic growth in the context of domestic and international developments that continue to have intertwined advantages, difficulties and challenges.
Specifically, in the high scenario, growth in the fourth quarter will be flat, reaching 7.4%, and growth for the whole year of 2024 is expected to reach the Government's target of 7%;
In the low scenario, Q4 growth is below 7%, and growth for the whole year of 2024 is forecast to fluctuate around 6.84%.
In the operating scenario, the Ministry of Planning and Investment recommends that the Government strive for fourth quarter growth of about 7.5%-8% so that the whole year's growth can reach and exceed 7%.
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