International experts expect Vietnam's GDP growth in 2024 to reach target

According to Mr. Michael Kokalari - CFA, Director of Macroeconomic Analysis and Market Research at VinaCapital - Vietnam's GDP growth is forecast to slow down, from 8% in 2022 to 4.7% in 2023. The reason comes from the decline in exports and production this year due to the decrease in demand for "Made in Vietnam" products.

Specifically, Vietnam's exports in the first 9 months of 2023 decreased by nearly 10% compared to the same period last year. Exports to the US, Vietnam's largest export market, decreased by nearly 20% as US companies ordered too many products from Asia in 2022. However, VinaCapital assessed that this trend is about to end and will create momentum for Vietnam's economic recovery next year.

In addition, domestic consumption growth was almost flat year-on-year (excluding tourist spending), compared to the typical growth rate of 8-9% before COVID-19. Market sentiment was affected by ongoing challenges in the real estate market and by a decline in Vietnam's exports, which led to a number of foreign-invested factories cutting jobs (most of Vietnam's exports are produced by FDI companies).

In contrast, foreign tourist arrivals have recovered to nearly 70% of pre-COVID-19 levels this year, which should support Vietnam’s GDP growth in 2023. While foreign tourism previously contributed about 10% of GDP, it contributed almost nothing to Vietnam’s economy last year.

In 2024, VinaCapital expects Vietnam’s GDP growth to recover to 6.5% thanks to a recovery in exports, accompanied by an improvement in Vietnam’s manufacturing output, from zero growth in 2023 to 8-9% growth in 2024, compared to the long-term average growth of 12% of the industry before COVID-19.

"US retailers and other consumer companies have accumulated too much inventory in 2022 (inventories increased by more than 20% year-on-year by the end of 2022). The reason is that these companies over-ordered during the COVID-19 supply chain disruption (2021) and the expectation of a post-COVID-19 spending boom has not materialized as expected.

Instead of buying more products when the COVID-19 lockdown was lifted, consumers poured money into services such as travel and dining out. Companies in the US had to deal with the aforementioned inventory throughout 2023. Inventory levels decreased at the fastest rate in nearly 10 years. This was the main factor causing the decline in Vietnam's exports and manufacturing output this year. However, many data show that this phenomenon is about to end and Vietnam's export orders are recovering" - Mr. Michael Kokalari commented.

More optimistically, experts from Standard Chartered Bank maintained their forecast for Vietnam's GDP growth in 2024 at 6.7% (6.2% in the first half of the year and 6.9% in the second half). The above figures are equal to or exceed the target set by the Prime Minister for GDP growth in 2024 at around 6 - 6.5%.

Mr. Tim Leelahaphan - Economist for Thailand and Vietnam, Standard Chartered Bank - assessed: "The medium-term economic outlook remains promising thanks to Vietnam's openness and economic stability. To attract FDI, Vietnam needs to restore rapid GDP growth and develop infrastructure".

Source