Two-digit growth realistic, and on the horizon for Vietnam: experts

At the Vietnam Economic Forum 2024 in Ho Chi Minh City on December 12. (Photo: VNA)

HCM City – Vietnam’s economic landscape is poised for robust growth, with experts forecasting the possibility of a remarkable two-digit expansion in the coming time, driven by foreign direct investment (FDI) and technological advancements.

The experts made the prediction while attending the Vietnam Economic Forum 2024 in Ho Chi Minh City on December 12 to discuss policies to support enterprises navigate market complexities.

Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, said the Vietnamese economy has recovered well so far this year, with GDP growth possibly reaching 7%.

In January – November, such indicators as investment, consumption, net exports, and credit rebounded compared to the same time in 2023. Inflation and exchange rates increased but will gradually slow down, while public and private debt risks remained moderate. Although non-performing loans rose, they remained under control, he pointed out.

However, Luc held that Vietnam should pen initiatives to lure foreign direct investment, given a modest 1% increase in new FDI registrations compared to the previous year.

Total registered FDI for the first 11 months reached 31.4 billion USD, marking only a 1% increase year-on-year. However, disbursed FDI showed a more robust growth of 7.1%, totaling 21.68 billion USD, statistics from the Ministry of Planning and Investment showed.

Prof. Dr. Hoang Van Cuong, a member of the National Assembly’s Finance – Budget Committee noted that while new FDI registrations only grew marginally in 2024, this followed a significant 32% increase in 2023, meaning FDI attraction has been on a sound trajectory.

He laid stress on the important role of the foreign capital in Vietnam’s economic landscape which accounts for 70% of the export turnover, adding FDI will remain a driving force for economic growth in 2025 due to investor confidence.

Stability in exchange rates and favorable credit ratings, such as Moody’s Ba2 and Fitch’s BB, have reinforced investor trust, he said, highlighting Vietnam’s efforts to capitalise on free trade agreements, diversify markets, and remove logistics cost challenges to attract FDI.

According to Cuong, the investment landscape is transforming. While previously focusing on cheap labour, investors are now prioritising high-tech and scientific investments, representing a critical opportunity for Vietnam to achieve two-digit growth in the coming time. Additionally, the freshly-adopted laws are expected to remove roadblocks and create motives for economic development.

Meanwhile, Assoc. Prof. Dr. Pham Thi Thu Ha from RMIT University Vietnam said that president-elect Donald Trump's tough foreign policy could lead to more supply chain relocations. According to Ha, this is an opportunity for local firms to expand cooperation and integrate deeper to the global supply chain as international groups relocate manufacturing facilities in Vietnam.

She said Vietnamese firms must move beyond assembly and processing to climb higher in the value chain.

Dr. Tran Du Lich, a member of the National Financial and Monetary Policy Advisory Council, highlighted that while Vietnam makes up 1.3% of the global trade, it currently captures minimal value from high-tech exports, citing semiconductor production as an example, with Vietnam’s role largely limited to packaging, which constitutes just 3.5% of the total value chain.

The textile industry also exemplifies the challenge. Vice President of the Vietnam Textile and Apparel Association Tran Nhu Tung reported an estimated 10% export increase this year. But he also underscored the need for businesses to land investment in advanced technology, capital and human resources to improve their competitive edge and deliver on the two-digit growth target in 2025 as set by the Government./.