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Việt Nam economy to grow by 6% in 2024

Việt Nam’s economy will grow by 6 per cent in 2024, faster than in 2023, according to economists of HSBC Vietnam.

James Cheo, Chief Investment Officer, Southeast Asia and India, Global Private Banking and Wealth, HSBC, said that the strength of the Việt Nam economy in 2024 would come from a combination of consumer and investment spending.

The strong inflows of Foreign Direct Investment will likely continue in 2024, buttressing Việt Nam’s manufacturing sector. The nascent recovery of the global trade cycle will boost Việt Nam’s exports. Furthermore, Việt Nam is likely to witness a gradual uptick in international tourism.

“Inflation is fairly stable but there could be an upside risk from higher-than-expected energy or food prices, we think that Việt Nam’s monetary authority will stay vigilant and keep policy rates on hold for this year. We forecast the Vietnamese đồng to move towards VNĐ24,400 against the US dollar by the end of 2024,” said Cheo.

HSBC Global Private Banking (HSBC GPB) expects the beginning of Fed rate cuts in June 2024, US soft landing, corporate earnings recovery, and solid Asia growth to improve global risk appetite and investment outlook of equity and bond markets in 2024.

For the next six months, HSBC GPB adopts a mild risk-on investment strategy with underweight on cash, mild overweight on US Treasuries and global investment grade bonds and tactical overweight on hedge funds.

“As we look ahead into 2024, we see two positive drivers supporting global financial markets. Major western central banks have done rate hikes amid continued disinflation and the US economy is heading for a soft landing. These two positive developments should support recovery of global risk appetite in 2024. Positioning for slower but positive global growth and Fed rate cuts starting in June 2024, putting cash to work in quality bonds, US and Asian equities and alternatives should deliver diverse sources of return and income to optimise portfolio performance and mitigate market volatility,” said Fan Cheuk Wan, Chief Investment Officer, Asia, Global Private Banking and Wealth, HSBC.

“We see quality bonds as the most attractive asset class for H1/2024 ahead of the first Fed rate cut. We focus on locking in still attractive yields via our overweight in US and UK government bonds and investment grade bonds across developed and emerging markets. Although global growth should remain below trend growth in 2024, the US growth engine continues to run, thanks to the resilient US consumer and government stimulus supporting investment and innovation in technology and healthcare. Equity valuations now see better fundamental support from earnings recovery that we anticipate in 2024, which provides a potential upside for stocks that can deliver on earnings expectations. We expect the global AI investment boom will extend into 2024, reinforcing our bullish view on the global, US and Asian IT sectors,” noted Fan.

“Going against the global headwinds, Asia’s robust private wealth accumulation, resilient middle-class consumers, digital transformation and green transition offer solid domestic drivers to support healthy economic growth. We forecasted that Asia ex-Japan GDP will grow 4.5 per cent in 2024, close to double the average global growth of 2.4 per cent, led by India’s 6.0 per cent, Indonesia’s 5.2 per cent, and China’s 4.9 per cent growth this year.” added Fan.

EXPORT-IMPORT IN 2023

Sweden exports to Vietnam

Sweden imports from Vietnam

Denmark exports to Vietnam

Denmark imports from Vietnam

Norway exports to Vietnam

Norway imports from Vietnam

EVFTA

FTAs key in boosting export

In a bid to achieve a targeted 6 per cent export growth in 2024, equivalent to US$377 billion, the Ministry of Industry and Trade (MoIT) outlines a strategic focus on leveraging existing Free Trade Agreements (FTAs) and signing new ones. The emphasis is on expanding and diversifying markets, products in import-export, and supply chains, with a special focus on sustainable mainstream exports linked to brand building.

According to the ministry, the global economy will likely continue to experience slowdowns in 2024, which may adversely impact developing economies, including Việt Nam. Protective trade policies, concerns about consumer safety, sustainable development and climate change effects in developed nations have led to the establishment of new standards and regulations affecting supply chains, raw materials, labour, and the environment for imported products.

Preliminary statistics from the Vietnam General Department of Customs reveal a 7.5 per cent decrease in the Southeast Asian economy’s exports in the first half of January 2024, amounting to $15.1 billion. However, the export value of fruits and vegetables notably increased by 50 per cent, reaching approximately $229.37 million, compared to the same period last year.

Việt Nam’s rice export, despite a decrease in quantity, surged by almost $20 million in the first half of January 2024. The average export price per tonne of rice saw a significant increase from $507 to $693, resulting in a 36.68 per cent rise in the average export value.

Trần Thanh Hải, Deputy Director of the Import-Export Department under the MoIT, said there are also favourable factors in the global and domestic economic context for import-export activities in 2024. The Federal Reserve’s decision to halt interest rate hikes and potential reductions, along with the gradual decrease of inventories in many markets, presents opportunities for Vietnamese goods.

However, the ministry acknowledges unpredictable risks in import-export activities in 2024, including the rising trend of trade protectionism, changes in shipping routes due to tensions in the Red Sea, and impacts on key export products from markets prioritising sustainable products.

To support export businesses, the ministry will continue to maximise Việt Nam’s leverage in existing FTAs, promote awareness of rules of origin, and facilitate the issuance of certificates of origin. Market information dissemination, focused trade promotion activities, and assistance in overcoming new trade barriers are also part of the comprehensive strategy.

Vũ Bá Phú, Director of the Trade Promotion Agency under the MoIT, said measures have been taken to improve technical support programmes in collaboration with international organisations. These programmes aim to enhance the capacity of the manufacturing sector, particularly focusing on regulations related to the Carbon Border Adjustment Mechanism (CBAM) and green standards set by Germany and the EU.

He said as 2024 unfolds with a mix of opportunities and challenges, the MoIT recommends that businesses remain vigilant and proactive, closely monitoring global and domestic production dynamics, supply and demand, and commodity prices. Timely and effective solutions are essential to achieving the set export goals in 2024 and for the 2021-2025 period.

Việt Nam’s textiles and garments yet to fully unlock FTA’s advantages and potential

Việt Nam’s textile and garment industry has not been able to fully capitalise on the advantages and potential of FTAs, according to the Ministry of Industry and Trade (MoIT).

To address this issue, the MoIT, as the leading agency for FTA negotiation and enforcement, has been enhancing connections with ministries, localities, associations, and stakeholders to establish a collaborative ecosystem to help the textile industry effectively leverage FTAs.

According to Ngô Chung Khanh, deputy head of the multilateral trade policy department under the MoIT, the Vietnamese government has signed various FTAs with many markets around the world, with a key focus on reducing tariffs to the lowest and quickest levels and simpler rules of origin for Vietnamese goods, especially in the textile and garment sector.

In a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI), while most enterprises had some understanding of the FTAs, only about 8 per cent possessed a clear understanding.

According to the ministry, Việt Nam’s trade balance has been significantly in deficit in the East Asian markets, amounting to nearly US$129 billion in 2022, with $60.5 billion in trade with China, $37.9 billion with South Korea, and $13.42 billion with ASEAN.

Meanwhile, the Southeast Asian economy registered a substantial surplus with the US and the EU last year, $95 billion in surplus with the US, $31.4 billion with the EU, and $5.2 billion with the UK.

However, the market share of Vietnamese textiles in FTA markets has not increased in the past 4 years and remained relatively modest. In the EU, Vietnamese textiles account for only 4 per cent in the UK, 2 per cent in Canada, and 13 per cent in Mexico.

The proportion of raw processing in Vietnamese enterprises is still too large, with cut-make-trim (CMT) accounting for about 65 per cent, OEM production about 30 per cent, and ODM production about 5 per cent.

Difficulty in accessing capital remained a major challenge for enterprises in making further investments and improving competitiveness. The VCCI’s survey showed the percentage of enterprises concerned about credit access has been increasing over time. In 2020, only 40.7 per cent of enterprises were concerned, in 2021, this figure increased to 46.9 per cent, and in 2022, it reached 55.6 per cent.

In addition, Vietnamese businesses have yet to embrace development and lack collaboration.

However, Khanh said sustainable development was not only a requirement of foreign management agencies but also of consumers. Failing to meet consumers’ demands would likely result in losing orders.

He said in the FTA implementation plan, the government had set up a framework for Vietnamese and FDI businesses to enhance collaboration but so far, it had not been able to minimise unhealthy competition within the industry.

Trần Hoàng Phú Xuân, CEO of HCM City-based FASLINK Fashion, said there were still few Vietnamese businesses that actively participate in international trade fairs to understand end-users and target markets, preferring to receive orders directly in Việt Nam through intermediary companies.

Factors that have been hindering stronger growth include a global economic slowdown, resulting in fewer orders being placed.

The MoIT proposed a number of solutions, aiming to widen the search for new partners and seek new customers.

However, the ministry said the long-term plan was to build an ecosystem for the industry, one that would connect farmers to manufacturers, exporters, associations, regulatory agencies, consulting companies, logistics, and importers.

The Prime Minister’s Office has also instructed the ministry to coordinate with ministries, localities, and associations to develop a plan for each province to develop key product lines.

Khanh said Vietnamese businesses must start positioning FTA markets as keys in their export strategy. To enter these markets, enterprises needed to research and understand the market information and policies, devising an access and brand-building strategy.

OTHER NEWS

HCM City seeks ways to reduce greenhouse gas emissions to develop green economy

HCM City wants to promote innovative initiatives and multinational cooperation, calling for private investment to gradually transition to a greener and more sustainable economy, Chairman of the City People’s Committee Phan Văn Mãi said.

At the Investment Promotion Conference for Green Growth Development organised by the City People’s Committee in coordination with the World Bank (WB) in Việt Nam on January 24, Mãi said the city is identified as one of 10 cities in the world most heavily affected by climate change.

The latest research results published by the Institute of Environment and Natural Resources of the City National University show that, on average, total annual greenhouse gas emissions in the city are more than 60 million tonnes of CO2.

Of this amount, there are three main waste sources, including industrial activities with nearly 20 million tonnes of CO2, traffic contributing more than 13 million tonnes of CO2 and the rest are domestic and other activities.

The city set a target of reducing emissions by ten percent in 2030 under the action plan of dealing with climate change from now to 2030, which aims at building a convenient, safe and effective living and working environment for residents and enterprises.

At the same time, the city is also facing the negative effects of climate change, environmental pollution, resource shortages and economic crisis.

Through the conference, the city desires to promote innovative initiatives and cooperation with countries all over the world and calls for private investment to step by step transform the city into a green and sustainable economy.

World Bank Country Director for Việt Nam, Asia-Pacific Region, Carolyn Turk said that the target of a 10 percent CO2 emission reduction was an ambition but it could be obtained with appropriate strategies.

The World Bank is expected to support the city in implementing economic development strategies and emission reductions.

The city and World Bank (WB) established the HCM City – WB Joint Working Group (HWG) two years ago, which brought an investment package of US$650 million for a ten-year program along with an investment program to upgrade public assets, an integrated flood management program and so on.

In addition, the World Bank also committed to supporting the city to access financial sources and attract foreign resources to reduce carbon emissions.

According to Carolyn Turk, the carbon credits market would be a good resource. She hoped that the city can sell credits on the Voluntary Carbon Market.

In addition, the WB desires to help the city to gather carbon credits to create a volume large enough for international trading and cost reduction.

The investment conference for the city’s green growth took place within the framework of green and sustainable growth development activities of the HCM City – World Bank Joint Working Group.

The event attracted hundreds of local and foreign delegates, international institutions, organisations, representatives of diplomatic agencies, consular agencies, domestic and foreign businesses and experts.

Calling for investment in green growth development projects

To achieve the green growth goal, the city’s People’s Committee has issued a list of 28 projects to call for investment at the conference.

Accordingly, the city calls for investment in three high-tech manufacturing projects in the field of electronics and semiconductor chips with a total investment of more than VNĐ4.1 trillion (US$172.5 million).

The city also calls for investment in the Data Center project with a total investment of more than VNĐ6.9 trillion.

Also in the field of high technology, the city calls for investment in research and development projects in the fields of electronics and other semiconductor circuits of about VNĐ213 billion and high-tech supporting industrial production projects with a total investment of VNĐ345 billion.

Ensuring smooth traffic is also one of the ways to reduce greenhouse gas emissions. Therefore, traffic infrastructure upgrading projects are key and include projects such as upgrading and expanding National Highway 13 from Bình Triệu Bridge to Vĩnh Bình Bridge for 5.9km with total investment capital of VNĐ13.85 trillion, renovating and upgrading National Highway 22 with a length of 91km and total estimated capital of VNĐ7.2 trillion, building new bridges such as Thủ Thiêm Bridge No.4 and Cần Giờ Bridge and investment in construction of HCM City – Mộc Bài Expressway costing more than VNĐ19.8 trillion.

The city also calls for investment in five projects in the fields of wastewater treatment, environmental improvement, and urban beautification.

PM meets with representatives of foreign-invested enterprises

Prime Minister Phạm Minh Chính attended a meeting with representatives of donors and foreign-invested enterprises in Việt Nam on Friday on the occasion of the upcoming Lunar New Year festival.

The event, which was hosted in Hà Nội by the Ministry of Planning and Investment, brought together officials from ministries and sectors, ambassadors, and heads of development cooperation agencies and international organisations, and representatives of associations and businesses, and foreign investors in Việt Nam.

In his opening remarks, Minister of Planning and Investment Nguyễn Chí Dũng said despite many difficulties and challenges in 2023, Việt Nam still reaped many remarkable achievements.

He expressed his belief that with Việt Nam’s efforts and close and effective cooperation of diplomatic agencies, development partners, international organisations, associations, businesses, and foreign investors in Việt Nam, the country will gain more socio-economic development achievements in 2024.

Representatives of international organisations, donors, and foreign investors congratulated Vietnam on overcoming “headwinds” and achieving important achievements amidst the global economic downturn.

Việt Nam’s successes prove the country’s right choice and orientations on its path of development, they said, expressing their appreciation for the Vietnamese Government’s cooperation, support and facilitation for their business and investment activities in the Southeast Asian nation.

Delegates applauded Việt Nam’s national development strategies, especially its goal of green and sustainable development, attention to social security and welfare, environment protection, and commitment to cutting emissions to net zero by 2050.

They pledged to support and accompany Việt Nam in achieving its goal of becoming a developing country with a modern industry and upper middle income by 2030, and a developed nation with high-income by 2045.

Offering New Year greetings to the guests, PM Chính said that in its national development policy, Việt Nam has based on the three pillars of building socialist democracy, a law-governed socialist State, and a socialist-oriented market economy. During this process, the country doesn’t pursue pure economic growth at the expense of social progress or equality but considers people as the centre, subject, goal, momentum, and resource of development, he said.

Thanks to following this policy, despite difficulties caused by the COVID-19 pandemic and impacts of the global situation over the past years, Vietnam has still managed to secure macro-economic stability, control inflation, boost growth, and guarantee major balances. Budget overspending, public debts, Government debts, and foreign debts have stayed under control; while the country’s independence, sovereignty, and territorial integrity been safeguarded; social order and safety firmly maintained; the corruption combat enhanced; defence and security ensured; and external relations remained a bright spot, he noted.

PM Chính attributed those results to the leadership by the Communist Party of Việt Nam, headed by General Secretary Nguyễn Phú Trọng and efforts by the entire political system, the whole people, and businesses; along with assistance from international friends, investors, and sponsors.

On behalf of Party and State leaders, the PM expressed his gratitude to international friends for their support for the country’s development, especially in 2023.

He called on them to join Việt Nam in upholding solidarity and taking actions so that all people can become richer and happier, there are no more wars, and no one is left behind for the sake of prosperity for each nation and a better world, with the spirit of “harmonising interests and sharing risks” and “your victories are also Việt Nam’s.”

Foreign investment flows into Việt Nam increase 40% in January

Việt Nam lured over US$2.36 billion worth of foreign investment in January, a rise of 40.2 per cent year-on-year, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

This was an encouraging figure compared to the same month of last year when foreign investment registered in Việt Nam saw a yearly decline of 20 per cent, the FIA said.
Of the sum, over $2 billion was invested in 190 new projects, a year-on-year surge of 70 per cent in level of capital and 24.2 per cent in project number, it said, outlining a large-scale urban area worth above $662 million as a typical project licensed in the month.

At the same time, $235.4 million was injected into 75 underway projects, down 23 per cent in capital and 16 per cent in number of projects year-on-year.

Meanwhile, investment through capital contribution and share purchase deals hit over $116.5 million, 33 per cent lower than the same month last year.

Following an upward trend of fresh capital, foreign investment disbursement also witnessed a yearly rise of 10 per cent to $1.48 billion, the FIA noted.

During the first month of this year, 39 countries and territories invested in Việt Nam, led by Singapore with over $1.4 billion, accounting for 59.5 per cent of total investment inflows, a rise of 73 per cent year on year. Japan ranked second with nearly $297 million, making up 12.6 per cent of the total or seven times higher than the same month last year.

Other sources of Việt Nam’s foreign investment included Samoa, mainland China, and Hong Kong.

The agency said that China ranked first in terms of the number of new projects, totalling nearly 19 per cent, while South Korea took the lead in the quantity of capital-added projects and investment through capital contribution and share purchase deals, making up 26.7 per cent and 25.3 per cent, respectively.

Among 35 localities receiving foreign investment in January, the capital city came first with $867 million or 36.7 per cent of the total. The southern province of Bà Rịa-Vũng Tàu ranked second with $282 million or 11.9 per cent, followed by two northern provinces of Bắc Giang and Bắc Ninh, and southern Đồng Nai province.

As of January 1, 2024, the country was home to 39,377 valid foreign-invested projects with a total registered capital of nearly $471.9 billion. Nearly 63.3 per cent of the sum ($298.66 billion) was disbursed, according to the agency.

Deputy Minister of Planning and Investment Trần Quốc Phương said at a recent meeting that the position and role of Việt Nam in the global FDI flows had continued to improve.
Việt Nam had strongly promoted innovation, digital economy, green growth, circular economy and new economic sectors such as chip manufacturing, semiconductors, high-tech agriculture and mining, as well as high-quality human resources training to better seize opportunities from major countries’ strategic competition, global foreign investment flow shifting, free trade agreements and partnerships with other countries.

However, Phương said that Việt Nam’s foreign investment in the new situation still faced shortcomings in terms of institutions, policies, investment quality and efficiency.
He added that the country was a bright spot in foreign investment attraction in the world. However, the link between the foreign-invested sector and domestic enterprises remained weak, which led to slow technology transfer and the country’s low position in the global value chains.

Coffee supply in a severe shortage, prices forecast to continue increasing in 2024

The prices of Vietnamese coffee are forecast to continue to increase next year due to severe supply shortage, according to the Vietnam Coffee Cocoa Association (Vicofa)

Domestic prices on Monday temporarily moved sideways after a series of increases last week to record levels. Never has Việt Nam experienced such a shortage of coffee.

Coffee prices were around VNĐ67,200 – 68,000 per kilogram in Tây Nguyên (Central Highlands) Lâm Đồng, Đắk Lắk and Đắk Nông, about VNĐ900 -1,000 per kg higher than last week and VNĐ8,000 than early December.

According to Mercantile Exchange of Việt Nam, for the week ending Sunday, coffee prices increased by 1.85 per cent for Arabica and 0.42 per cent for Robusta.

Farmers are delaying their sales with expectations of higher prices.

Despite being good news to farmers, high coffee prices push export enterprises into a lot of difficulty in collecting enough coffee for their signed contracts.

Đỗ Hà Nam, Vicofa’s Deputy President, said that unpredictable coffee price fluctuations caused difficulties in exporting. In the 2022-23 crops, several domestic exporters could not deliver in time because of rising prices, partly as an impact of hoarding. “During the past three decades, never have we thought that Việt Nam could be in a shortage of coffee,” Nam said.

The association has estimated that the coffee shortage of signed contracts is around 80,000 – 150,000 tonnes, waiting for the coming harvest season to be fulfilled.

Việt Nam exported more than 120,000 tonnes of coffee in November, half of which was to make up for the shortage of orders of the previous harvest crop, he said.

Coffee prices are forecast to be around VNĐ60,000 – 70,000 per kg in the coming months and are expected to decrease when Indonesia and Brazil start new coffee harvest seasons in April and May.

In the new crop, the asking prices of green coffee reached VNĐ60,000 per kg for delivery in December 2023 and January 2024 – an unprecedented price recorded at the beginning of harvest season due to high purchasing demand from export enterprises who are worried that there would be no coffee to buy from April or May next year. In 2023, coffee was out of stock from June.

According to Vicofa the European markets are the largest market for Vietnamese coffee, which consume around 40-50 per cent of the country’s exports and still have good demand for coffee.

“There will be tension in coffee supply sources. Việt Nam’s green coffee prices will continue to increase in 2024 and is poised for a record export revenue of $5 billion,” Nam said. This, however, causes a problem – enterprises are hoarding, which will bring significant risks.

A report about the coffee market by the US Department of Agriculture (USDA) issued last week showed that the global coffee inventory was estimated at 26.5 million 60-kg bags, 16.7 per cent lower than the previous estimate and the lowest inventory level in the past 12 years.

USDA forecasts that world coffee production for 2023-24 will reach 171.4 million bags, 6.9 million bags higher than the previous crop.

Việt Nam production is forecast to add 300,000 bags to reach 27.5 million. The cultivated area is forecasted to remain unchanged, with nearly 95 per cent of total output remaining as Robusta. However, with lower total supplies due to last year’s stock drawdown, bean exports are forecast to decline by 2.4 million bags to 23 million, according to the USDA’s report.

In the context of tense supply, Nam said that Việt Nam was focusing on solutions to promote the sustainable development of the coffee industry, including ensuring origin traceability and meeting the EU’s regulations on deforestation.

Positive outlook for Vietnamese economy

Andrea Coppola, World Bank Lead Economist for Việt Nam, has described Việt Nam in 2023 as resilient, saying that amid global economic slowdown, the Southeast Asian nation was still able to sustain a rate of growth that many other countries in the rest of the world can only dream about.

According to Coppola, Việt Nam is considered one of the most open economies in the world. Its strong trade relations with the rest of the world are a source of strength and success. Việt Nam’s economic performance in 2023 is positive when the very challenging global context is put into consideration.

Economic growth in the US was about 2.5 per cent in 2023, he said, adding that in the European area, economic growth was even weaker at about 0.5 per cent. Despite the global challenges, Việt Nam was able to continue growing at relatively fast rates.

The last part of the 2023 showed signs of economic recovery in the country, he said, noting that this recovery is driven by three main factors: a gradual recovery of external demand for Vietnamese exports, increasing public investment, and resilient private consumption.

Việt Nam also drew a lot of attention in 2023 as media outlets with global reach have published articles to underscore the country’s performance and potential, he said, stressing that the visits of world leaders to Việt Nam also attracted even more the attention of the international community.

According to the economist, Việt Nam is an appealing destination for international investors because of its economic and political stability and its capacity to integrate in the global economy.

He stressed that in such a context, it is critical for the country to continue strengthening the business environment and attract private investors’ attention to fully take advantage of impact of global geopolitical developments on international investment and trade.

After the global slowdown experienced in 2023, global economic growth is expected to decelerate further in 2024, including in key trade partners of Việt Nam such as the US, Coppola said.

The WB hopes that the demand for Vietnamese exports from the rest of the world will recover in 2024, he said, recommending Việt Nam to leverage its internal strength and boost the productivity growth of its domestic economy to transform the challenges provided by the global economic slowdown into an opportunity to further strengthen its economic growth model.

Authorities can play an important role to support the economy through fiscal policy, particularly by accelerating the implementation of transformational public investment and infrastructure projects which are going to strengthen economic growth both in the short term and in the longer term, he said.

According to the expert, Vietnamese people are the greatest source of the country’s internal strength, so he suggested Việt Nam continue promoting the private sector development and boosting productivity by upskilling the labour force and physical capital development through public investments in transport and energy infrastructure that can further strengthen the competitiveness of the private sector.

According to Việt Nam’s Macro and Poverty Outlook released by the WB in October, Việt Nam’s economic growth is expected to slow to 4.7 per cent this year before recovering to 5.5 per cent in 2024 and 6.0 per cent in 2025.

Meanwhile, the Asian Development Bank (ADB) maintains its GDP growth rate for next year at 6 per cent, with an expectation that there will be a certain recovery in the external environment, and domestic growth drivers will regain momentum from 2023.

Shantanu Chakraborty, ADB Country Director for Việt Nam, said public investment, domestic consumption, and export recovery will be the three main growth drivers of Việt Nam’s economy in 2024.

The official said that an important foundation to maintain growth momentum in the coming time will be macro-economic stability thanks to Việt Nam’s continuation of prudent fiscal policies, and proactive and flexible monetary policies applied since 2023, he stated, stressing the need to ensure that they are effectively carried out to create stronger momentum for the economy.

To achieve the 6 per cent growth in 2024, the ADB Country Director advised Việt Nam to speed up public investment in infrastructure, as it will help stimulate economic activities, support industrial, construction and mining businesses, and provide more employment opportunities.

Domestic consumption can be boosted by fiscal measures that encourage demand, and also supported by appropriate monetary policies that keep interest rates at relatively low levels.

To cope with headwinds, Việt Nam’s policies need to be more proactive to support enterprises in expanding their markets, and promoting the exploitation of signed free trade agreements.

In the long term, Việt Nam needs to promote public investment in green energy transition, upgrade infrastructure to improve the competitiveness of the economy, and strengthen the foundation to increase resilience and boost sustainable development, Shantanu Chakraborty said.

Assessing the country’s economic situation this year, he said that its economy is showing a strong recovery despite the global economy’s instability and increasing geopolitical tensions.

The Vietnamese Government has taken right steps to solve problems posed by global challenges. To date, the Government has achieved a balance between monetary and fiscal policies to ensure high resilience to the global challenges facing the economy.

The bank recently lowered its growth forecast for Việt Nam this year to 5.2 per cent from the previous 5.8 per cent forecast. However, according to him, Việt Nam’s growth rate is quite good compared to many countries in the region.