Vietnam's economy remains strong
Recently, world public opinion has objectively assessed the socio-economic development situation of Vietnam. Although Vietnam faces many difficulties, in the context of the gloomy world economy, Vietnam's economy is still considered a bright spot.
In its September report, the Asian Development Bank (ADB) forecast that Vietnam's economic growth will slow down in the coming time, to 5.8% in 2023 and 6% in 2024. The above figures are down from the forecast in April 2023, which were 6.5% and 6.8%, respectively, mainly due to weakening external demand. However, according to ADB, Vietnam's economy remains resilient and will recover quickly in the near future thanks to strong domestic consumption, moderate inflation, accelerating public investment disbursement and improved trade activities.
The World Bank (WB) has rated Vietnam as one of the "heroes" in the economic recovery process in the East Asia and Pacific region. However, the WB forecasts that Vietnam's GDP growth in 2023 will be only about 4.7%, lower than normal due to the economy's dependence on exports. Vietnam's GDP is expected to grow at 5.5% in 2024, but requires Vietnam to implement more reforms.
The World Bank assessed that Vietnam's economy has benefited greatly from the reforms that have been implemented, but there will be further progress if there is further reform in the public investment sector, the coordination mechanism for public investment management, and at the same time, continued reform of the service sector. Not only increasing productivity in the service sector, but also in other sectors of the economy.
Rising star in global market
Seeing Vietnam as a key factor in reorienting the global supply chain thanks to a number of comparative advantages, Immago, a website specializing in brand enhancement solutions, said that Vietnam's success is partly due to a development strategy focusing on using a preferential tax system and establishing industrial zones to attract investors.
Macroeconomics - Vietnam has the potential to become the world's new factory.
The World Bank (WB) has assessed Vietnam as one of the "heroes" in the economic recovery process of the East Asia and Pacific region.
As of December 2022, Vietnam has more than 400 industrial parks, including 4 export processing zones. Industrial parks and economic zones have attracted investment projects from 65 countries and territories, most notably investors from Korea (nearly 2,500 projects), Japan (more than 1,500 projects), and Singapore (nearly 450 projects).
After more than 30 years of building and developing industrial parks and economic zones, Vietnam has attracted large investment capital, accelerated the industrialization and modernization process, and transformed development space, with a greener, more balanced approach for more sustainable growth.
Vietnam’s emergence as a global manufacturing hub is undeniable, according to Immago. Countries like Bangladesh, Cambodia, and Indonesia are also seeing the opportunity and eyeing a piece of the pie. While Vietnam may not be the world’s only factory, it is certainly emerging as a rising star in the global market.
Vietnam is about to receive a "huge" capital flow from the US and EU
If 10 years ago, money from Japan, Korea, Singapore, China... poured into Vietnam, then in the new decade, large capital flows may come from Europe and the US. Vietnam's export value of 1,000 billion USD has also been mentioned.
Japan and Korea alone have so far poured more than 150 billion USD into Vietnam. FDI from the US and Europe could be much larger in the future.
In addition, capital flows in the financial market will also be very active when the stock market is upgraded, possibly in 2024. The new KRX trading system (based on Korean technology) with larger capacity and more products will be put into operation from the end of 2023. Instead of deals worth a few hundred million, there may be a few billion USD in domestic enterprises.
In a recent report by VinaCapital, the event of Vietnam and the US issuing a joint statement upgrading their relationship to a Comprehensive Strategic Partnership (CPS) after US President Joe Biden's official visit to Vietnam from September 10-11 marked a historic milestone for bilateral diplomatic relations between the two countries.
Accordingly, the CPS creates a framework for further cooperation and collaboration between Vietnam and the US in many fields, including economics, trade, science, investment, technology, digital, education, energy, etc.
In fact, the trend of shifting global supply chains has been strong in recent years. Not only Intel, Apple... but many other American and European corporations have also sought and expanded their supplier networks and developed production facilities in many new regions, including India, Indonesia, and Vietnam.
Today, Vietnam is emerging as a rising star in the global market.
Along with the "eagles", many other corporations also tend to move, such as Foxconn, Pegatron...
As for the EU, for many years, the economies of these countries have been heavily dependent on Russia and China, from gas and energy to raw materials and product markets. The recent vulnerability of European countries to heightened geopolitical tensions may cause the EU to make longer-term calculations for the future.
Recently, leading experts around the world have said that geopolitical tensions are now the number one enemy of the global economy, not protectionism. Professor of International Political Economy at Harvard Kennedy School Dani Rodrik also made such a comment on Project Syndicate.
Geopolitics has recently been considered one of the most important factors that can lead to a market crash, or a capital flow reversal, as well as financial and liquidity crises…
Capital flows from the US and EU may flow into some emerging economies. Capital flows from Japan, Korea, etc. will also continue to find safe havens.
With the EU, Vietnam has the EVFTA free trade agreement, along with the Vietnam-US CPS, which will be a driving force to help EU corporations accelerate investment shifts to Vietnam to take advantage of tax incentives and easily export to the US.
In a recent report by HSBC, the organization said that despite the bleak short-term outlook for trade, ASEAN continues to attract FDI, reaching a record global market share of nearly 17%.
According to HSBC, many investments have been poured into the region’s growing technology and electric vehicle supply chains as well as financial activities. Even Chinese investors are increasing their FDI in ASEAN’s diversified manufacturing and sub-sectors. Vietnam, meanwhile, is a bright spot in the region.
According to the General Statistics Office, foreign direct investment in Vietnam in the first 9 months of 2023 is estimated at 15.91 billion USD, up 2.2% over the same period last year - the highest level in 9 months of the years from 2019 to present. Registered capital reached more than 202 billion USD, up 7.7% over the same period last year.
Commenting on the positive factors in the last 3 months of the year, Mr. Le Trung Hieu, Deputy Director General of the General Statistics Office, said that the increase in basic salary for civil servants, public employees, workers and beneficiaries of the state budget since July 1 this year has been helping people increase spending, creating room for increasing total retail sales of goods and consumer service revenue in the last months of the year.
Policies to reduce taxes and fees; extend tax and land tax payments; and reduce loan interest rates to stimulate growth and support production and business not only stimulate production and investment, but also stimulate consumption, thereby having a positive impact on production, investment and business activities.
Tourism - an economic sector with a large spillover effect on many market service sectors such as transportation, accommodation, food and beverage, travel, art activities, entertainment, etc. - is one of the important driving forces to promote economic growth in the last months of the year. Especially attracting international tourists. Since the beginning of the year, Vietnam has welcomed about 9 million international tourists, 4.7 times higher than the same period last year. From now until the end of the year, we only need to welcome about one million more international tourists each month, then this year, we will achieve 150% of the set target.
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