There's a reason to speed things up.

A stable macroeconomic foundation, addressing difficulties, and providing timely support to internal bottlenecks in the economy will help Vietnam accelerate its growth in the coming period.

Vietnam is currently one of the most dynamic countries in East Asia and the Pacific . (Photo: Linh Chi)

In its assessment of the Vietnamese economy, the World Bank (WB) recently stated that economic reforms since 1986, combined with favorable global trends, have rapidly helped Vietnam develop from one of the poorest countries in the world to a lower-middle-income country.

The World Bank emphasized: "Vietnam is currently one of the most dynamic countries in East Asia and the Pacific."

Expected to be the fastest growing in ASEAN.

Analysis from the World Bank shows that Vietnam's Gross Domestic Product (GDP) at current prices in 1986 was only $26.34 billion, but by 2023 it had increased to $429.72 billion, a 16.3-fold increase. GDP per capita at current prices in 1986 was $430.2, and by 2023 it had increased to $4,346.8, a 10.34-fold increase.

The gross national income (GNI), calculated at current prices in 1989, was $14.15 billion, and by 2023 it had increased to $412.94 billion, a 29.2-fold rise.

GNI per capita, calculated at current prices in 1989, was $220, and by 2023 it had increased to $4,180, a 19-fold rise.

Thanks to its solid foundation, the World Bank assesses that the Vietnamese economy has demonstrated considerable resilience during periods of crisis. The bank forecasts that Vietnam's economic growth this year could reach 6.1% - higher than the 5.5% forecast made in April.

Not only the World Bank, but also UOB International Bank believes that Vietnam's economic outlook for 2024 remains positive, with a projected GDP growth rate of 6% and the potential to exceed this figure. This optimism is based on the strong performance of sectors such as manufacturing, electronics, furniture, and automotive.

Meanwhile, in Savills' Asia Pacific Investment Report for Q1 2024, Troy Griffiths, Deputy Managing Director at Savills Vietnam, commented that Vietnam's economic outlook for 2024 is very positive and could rank among the top 20 fastest-growing economies globally.

HSBC also raised its 2024 GDP growth forecast to 6.5% (previously 6%), the fastest expected growth rate in ASEAN. Meanwhile, the ASEAN+3 Macroeconomic Research Office (AMRO) revised its 2024 GDP growth forecast for Vietnam to 6.3%.

Domestic demand is expected to strengthen in the second half of 2024 as investor and consumer sentiment improves. (Source: Vietnam Insider)

Solid growth momentum

At the press conference announcing the Vietnam Economic Update Report at the end of August 2024, Andrea Coppola, the World Bank's chief economist in Vietnam, stated that after a downturn in 2023, Vietnam has returned to high growth rates in several sectors such as exports and industrial production since the beginning of this year, and foreign direct investment (FDI) is also at a high level.

Regarding economic opportunities in the remaining months of the year, given continued export growth and signs of recovery in the real estate market, the World Bank believes that domestic demand will strengthen in the second half of 2024 as investor and consumer sentiment improves.

Furthermore, the current account balance is projected to remain in a small surplus, the government is returning to strengthening the budget balance, and inflation is forecast to decrease from 4.5% in 2024 to 3.5% in 2026.

According to Dorsati Madani, a senior economist at the World Bank, Vietnam's recent growth is reflected in all three areas: foreign direct investment, private investment, and public investment. A stable macroeconomic environment, the removal of obstacles, and timely support for internal bottlenecks in the economy will help Vietnam accelerate its growth in the coming period.

She stated that the next important driver of economic growth is exports, which are still maintaining a positive and proactive position.

By mid-August, the country's total export turnover reached over $473 billion, with a trade surplus of nearly $15.5 billion. The industrial and manufacturing sectors also returned to a growth trajectory.

According to Mr. Nguyen Bich Lam, former Director General of the General Statistics Office, the manufacturing and processing industry is driving growth very well and regaining its role as the engine of economic growth.

He believes that Vietnam's exports, consumption, inflation control, and macroeconomic stability will be even more favorable in the coming period because they will be supported by positive external factors, such as the US Federal Reserve (Fed) considering cutting interest rates in the near future.

Since the beginning of this year, Vietnam has returned to high growth rates in several sectors such as exports and industrial production, and foreign direct investment (FDI) is also at a high level... (Source: Vietnamplus)

The fundamental prerequisite for becoming a developed country.

Looking at the global picture, economist Dr. Vo Tri Thanh observed that, at the end of 2023, the world economy still recorded a weak and uneven recovery among key economies. Production activities, from industrial output to investment and international trade, all declined.

Simultaneously, increasing geopolitical instability and slow inflation have forced most countries to continue implementing monetary tightening measures. Many organizations predict that the global economy will continue to recover weakly this year and next year, facing numerous risks.

However, according to Dr. Vo Tri Thanh, Vietnam maintains macroeconomic stability, inflation is not excessively high, and the economic recovery is progressing quite well. GDP in the second quarter of 2024 reached 6.93%, exceeding the target set in Government Resolution 01 (5.5-6%). This has led international organizations to see the potential for recovery and make more optimistic forecasts than Vietnam's stated target, with full-year growth around 7%.

Dr. Vo Tri Thanh emphasized: "Vietnam's GDP growth shows that the size of the economy has become much larger, reflecting recovery and a positive outlook on economic prospects. It can be seen that the size of the Vietnamese economy has increased more than 100 times in four decades, from $4 billion to $430 billion in 2023, placing Vietnam in the group of upper-middle-income countries."

"Stable development and attracting significant investment will be fundamental prerequisites for Vietnam to achieve its goal of becoming a developed country by 2045."

However, challenges remain. One of the main factors hindering economic growth is the uncertainty surrounding global economic growth, which may be lower than expected, especially the growth of Vietnam's major trading partners such as the US, EU, and China.

The World Bank recommends that Vietnam needs to boost public investment to both stimulate short-term demand and help address infrastructure shortages, especially in energy, transportation, and logistics (which are bottlenecks hindering growth); banks need to improve capital adequacy ratios and improve infrastructure development to attract private investment.

Furthermore, diversifying trade to enhance further integration will be a factor in improving Vietnam's economic resilience to external shocks. This will sustain the economic recovery, achieving a growth rate of 6.5-7.4% in the third quarter of 2024, thereby laying the foundation for achieving and surpassing the socio-economic development targets for 2024.

Source: https://baoquocte.vn/kinh-te-viet-nam-nam-2024-co-ly-do-de-but-toc-285120.html