Vietnam’s capital market develops strongly
Illustrative image (Source: VNA) |
Hanoi – Vietnam’s economy continued to receive positive assessments in August, including those from the World Bank (WB) that upgraded its growth forecast for this year to 6.1% from 5.5%.
The economy is projected to grow 6.5% in both 2025 and 2026, up from 5% last year, according to the bank’s latest bi-annual economic report on the country Taking Stock.
The country’s capital markets have developed strongly over the past decade, underpinned by robust macro-economic conditions but remained nascent, the WB’s Senior Financial Sector Specialist Ketut Kusuma said.
With the theme “Reaching new heights in capital markets,” the report highlights the resilience of the Vietnamese economy despite rising global challenges.
Vietnam's GDP expanded by 6.4% in the first half of 2024 compared to the same period last year thanks to the recovery of exports of processed goods, as well as higher investment and consumption.
However, the report notes that the economy is not yet back to its pre-pandemic growth path.
Despite recovering, consumer spending and private investment growth remained below pre-pandemic rates, it says.
WB experts held that credit growth improved after a sluggish start to 2024, but bank asset quality has remained a concern since 2023.
“During the first half of the year, Vietnam’s economy benefitted from the rebound in export demand,” said World Bank East Asia and Pacific Practice Manager for Macroeconomics, Trade, and Investment Sebastian Eckardt. “To sustain growth momentum not only for the rest of the year but over the medium-term, the authorities should deepen structural reforms, step up public investment while carefully managing emerging financial risks.”
According to the report, underpinned by robust macroeconomic conditions, Vietnam’s capital markets have developed strongly over the past decade. Healthy economic growth, a stable exchange rate, low inflation, and political stability have positioned its capital markets to catch up with regional peers in terms of their relative size, reaching above 90% of GDP in 2023, on par with Indonesia.
Well-functioning capital markets are critical to mobilize resources, as part of inclusive, resilient, and modern financial markets.
However, when evaluated through its success in intermediating finance, Vietnam’s capital market indicators still indicate an opportunity for further growth.
If Vietnam is to unlock the potential of its capital markets, several specific hurdles need to be overcome to ensure healthy and sustainable growth. A fundamental issue in the country is the underdevelopment of the institutional investor base, including the underutilisation of the Vietnam Social Security (VSS).
The report recommends a stronger policy framework, in which social insurance will become a dominant force in driving capital market development.
Despite steady FDI inflows, the financial account registered a smaller surplus in the first quarter of 2024 compared to Q1-2023 driven by higher net outflows. FDI was steady at 3.4% of GDP in Q1-2024 comparable to Q1-2023, thanks to continued foreign investors’ confidence in Vietnam’s economic prospects and the ongoing relocation of supply chains across the region.
To maintain the FDI inflows, WB experts said Vietnam should rise to a higher level in the value chain. In the medium and long term, the country needs to upgrade its economy through providing better quality human capital and improving the economy's backbone services such as transportation, telecommunications and electricity.
They also suggested Vietnam encourage the application of green technology and reduce pollutant emissions to maintain competitiveness.
HSBC’s latest report titled “Vietnam at a glance: FDI - Back to the basics” also said favourable fundamentals have positioned Vietnam as a prime FDI destination, outperforming ASEAN peers.
In fact, the surge of interest in Vietnam from multinational corporations stems from a variety of factors, including competitive costs and FDI-friendly policies.
Furthermore, the nation has made significant progress in terms of setting up various economic agreements with major trading partners, such as the EU-Vietnam FTA (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), it said./.
See also
Việt Nam's construction sector has grown 7.48 per cent on-year
10:38 | 12/10/2024 Economy
Businesses drive sustainability for a net zero future
10:22 | 12/10/2024 Economy
Market recovery, tourism growth drive sales of consumer goods, services: GSO
10:03 | 11/10/2024 Economy
Apartment supply in Hanoi surges in Q3
09:56 | 11/10/2024 Economy
Hà Nội and Sài Gòn Railway transport companies set to merge this year
09:26 | 11/10/2024 Economy
Banks reduce profit expectations for 2024
09:24 | 11/10/2024 Economy
See more news
Việt Nam to focus on improving legal framework for digital technology export
09:21 | 11/10/2024 Economy
Nearly 13,000 smuggling and fraud cases uncovered in nine months
09:05 | 11/10/2024 Economy
HCM City’s economy grows 7.33% in Q3
09:01 | 11/10/2024 Economy
Many businesses in Việt Nam willing to pay high salaries for AI personnel
08:55 | 11/10/2024 Economy
Defining the role and position of the private sector
16:48 | 10/10/2024 Economy
WB, UOB raise Việt Nam’s GDP growth forecast
16:20 | 10/10/2024 Economy
Seminar explores Vietnam’s role in Southeast Asia’s green transitions
10:30 | 10/10/2024 Economy
F&B ingredients expo begins
09:06 | 10/10/2024 Economy
Foreign investors interested in chip, green production in Việt Nam
08:57 | 10/10/2024 Economy
Disbursement rate for public investment remains sluggish: MoF
08:51 | 10/10/2024 Economy
Implementation plan for the US$3.4 billion Thu Thiem - Long Thanh railway project
21:57 | 12/10/2024 Society
Chinese Premier arrives in Hà Nội, beginning official visit to Việt Nam
20:40 | 12/10/2024 News and Events
RoK companies step up investment in hi-tech industries in Vietnam
17:48 | 12/10/2024 FDI
Vietnamese, Chinese Parties strengthen relations
17:38 | 12/10/2024 Vietnam and other regions
Top leader attends opening of new academic year at Vietnam National University of Agriculture
17:29 | 12/10/2024 News and Events
Multimedia
Vietnam-China trade ties: A growing pillar of partnership
10:00 | 12/10/2024 Infographic
Hanoi Liberation: Important milestones
15:39 | 09/10/2024 Infographic
Vietnam makes active contributions to ASEAN development
09:15 | 09/10/2024 Infographic
France becomes Vietnam's 8th Comprehensive Strategic Partner
08:57 | 08/10/2024 Cooperation
Two historic battles of the capital’s armed force and people
09:53 | 07/10/2024 Infographic
Vietnam turns to nuclear technology for development
10:05 | 12/10/2024 Policy
PM’s attendance at ASEAN Summits affirms Việt Nam’s spirit, vision in new era
07:50 | 12/10/2024 Policy
Multiple laws under review for revisions
08:55 | 11/10/2024 Policy
Top leader attends Hà Nội's Liberation Day anniversary, highlights potential to drive growth
20:31 | 10/10/2024 Policy
MoIT approves price framework to purchase electricity from Laos
08:38 | 11/10/2024 Energy
Foreign investors interested in green development, semiconductor industry in Vietnam
17:34 | 09/10/2024 Industry
Việt Nam seeks Japan's cooperation in hydrogen energy development
14:33 | 09/10/2024 Energy
Việt Nam's industrial production saw positive growth in nine months
14:20 | 08/10/2024 Industry
RoK companies step up investment in hi-tech industries in Vietnam
17:48 | 12/10/2024 FDI
Ca Mau Province accelerates public investment disbursement
17:29 | 11/10/2024 Investment
HCM City approves US$9b Cần Giờ coastal urban development project
10:04 | 11/10/2024 Investment
Bac Ninh leads nation in FDI attraction in nine months
18:05 | 09/10/2024 FDI
PM urges WB to provide concessional loans for key infrastructure projects
08:52 | 11/10/2024 Finance-Banking
DIC Corp completes buyback of $18.6 million in bonds
09:25 | 10/10/2024 Finance-Banking
Update on exclusive partnership between Manulife Vietnam and Techcombank
14:52 | 08/10/2024 Finance-Banking
VPBank, LOTTE C&F cooperate to provide financial service with “Buy now pay later” product
09:31 | 07/10/2024 Finance-Banking
Leveraging power of community to protect unique Yok Đôn ecosystem
14:49 | 09/10/2024 Environment
Little cooperation from zoo operators in mass deaths of tigers, lions, panther: authorities
09:18 | 08/10/2024 Environment
Issuing “passports” for forest visits
22:12 | 05/10/2024 Environment
Vietnam’s forestry sector leads in achieving net negative emissions
09:16 | 04/10/2024 Environment
Vietnamese youth set to excel in high-tech industries
15:45 | 12/10/2024 Science - Technology
Technology summit promotes sustainable digital economy in Việt Nam
10:35 | 12/10/2024 Science - Technology
Vietnam ready to turn off 2G service
16:34 | 11/10/2024 Science - Technology
Digital infrastructure strategy approved
09:50 | 11/10/2024 Science - Technology
Implementation plan for the US$3.4 billion Thu Thiem - Long Thanh railway project
21:57 | 12/10/2024 Society
Huge opportunities with North-South high-speed rail
09:47 | 12/10/2024 Society
Implementation of Red River Delta Region Planning approved
09:00 | 11/10/2024 Society
Nine Vietnamese universities make global rankings 2025
17:05 | 10/10/2024 Society
Fifteen Vietnamese banks named in the global top 500 banking brands
16:24 | 10/10/2024 Vietnamese Brands
Việt Nam's second rice brand enters picky Japanese market
09:03 | 10/10/2024 Vietnamese Brands
Ben Tre to export first batch of fresh coconuts to China in October
09:41 | 08/10/2024 Vietnamese Brands
Mê Linh harnesses the potential of OCOP products
09:36 | 07/10/2024 Vietnamese Brands
Việt Nam promotes location opportunities at Busan International Film Festival
09:41 | 11/10/2024 Culture
Hanoi – World’s Leading Culinary City Destination
16:15 | 10/10/2024 Lifestyle
Pride and patriotism: the ‘expat’ view
09:19 | 10/10/2024 Culture
German Film Awards winner opens Kinofest in Hà Nội
09:16 | 10/10/2024 Culture
Hà Nội develops tour to explore Thường Tín’s craft villages
09:32 | 11/10/2024 Tourism
Vietnam Airlines promotes tourism in Germany
09:27 | 10/10/2024 Tourism
Việt Nam sees surge of tourists from visa-exempt countries in 2024
09:46 | 08/10/2024 Tourism
Cultural tourism requires more investment to become cultural industry
09:24 | 08/10/2024 Tourism