In a recently released report by VinaCapital, the Vietnamese National Assembly officially approved a plan to increase public investment in 2025 from 6% of GDP to 7% of GDP; simultaneously raising the GDP growth target for 2025 to 8%. Thus, the projected increase of 1% of GDP in infrastructure projects is expected to help Vietnam achieve its new GDP growth target, as well as support long-term growth prospects and attract foreign direct investment (FDI) into Vietnam.
Specifically, Vietnam's public investment plan for this year will be increased to $36 billion (compared to $31 billion approved at the end of last year) and nearly 40% higher than in 2024. This is expected to offset potential negative impacts on GDP growth this year, as export growth to the US is projected to slow after an impressive 23% increase in 2024.
In addition, some of the Government's latest moves also demonstrate its determination to disburse public investment this year, such as: Initiating and approving the investment policies of several large projects; operating the first metro line in Ho Chi Minh City in December 2024; officially promulgating relevant laws to accelerate the project approval process, simplify investment allocation, and encourage greater private sector participation in infrastructure projects…
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| Mr. Michael Kokalari, Director of Macroeconomic Analysis and Market Research (VinaCapital). (Photo: Investment Newspaper) |
Regarding fiscal space, Michael Kokalari, Director of Macroeconomic Analysis and Market Research at VinaCapital, believes that Vietnam has abundant resources to increase public investment spending, with government debt below 40% of GDP and an estimated unspent budget of up to $40 billion.
The main bottleneck in accelerating public investment disbursement is the difficulties in policy mechanisms during the approval and development of large-scale projects. Therefore, passing relevant laws will help speed up progress and ensure that disbursement targets can be achieved.
According to Mr. Kokalari, although Vietnam is facing challenges in export growth, especially to the US market, increasing public investment by 40% will contribute approximately 2 percentage points to the target of 8% GDP growth in 2025. Public investment will be a crucial factor in helping Vietnam maintain strong growth amidst global difficulties.
Furthermore, Michael Kokalari also predicted that in 2025, the sentiment of foreign investors will improve compared to 2024, with expectations that FDI flows into Vietnam will continue. Stable economic policies, along with Vietnam meeting almost all international standards to be upgraded to an emerging market, are expected to attract more investment from international markets. He also believes that continued promotion of administrative reforms and simplification of procedures will create favorable conditions for businesses and investment activities in Vietnam in the near future.
Source: https://thoidai.com.vn/dong-luc-nao-giup-gdp-viet-nam-dat-8-212527.html
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