Vietnam’s economy to grow 5.5 percent in 2024: WB’s report

The WB forecasts Vietnam would reach a GDP growth rate of 5.5 percent in 2024

Gradual recovery

Vietnam’s economy is showing mixed signs of recovery in early 2024, with growth forecast to reach 5.5 percent in 2024 and gradually rise to 6.0 percent in 2025, according to the latest World Bank Taking Stock bi-annual economic update released on April 23.

Addressing a press conference held by the WB on the same day, Andrea Coppola, World Bank Lead Economist for Vietnam, said after experiencing downturns in 2023, Vietnam’s economy has been showing signs of recovery during the first quarter of 2024, and the country’s exports are recovering, and consumption and private domestic investment growing more gradually.

Real exports are expected to grow by 3.5 percent in 2024, reflecting a gradual improvement in global demand. In addition, a turnaround in the real estate sector is anticipated later this year and next year, bolstering domestic demand as investors and consumers regain confidence, he said. The total private investment and consumption are expected to increase by 5.5 and 5 percent, respectively, in 2024.

Dorsati Madani, Senior Economist at the WB in Vietnam, underscored the importance of sustained fiscal policy support to reinforce the recovery, and recommended expediting infrastructure investment projects financed by public resources, saying that this will help further stimulate the economy, with an additional potential 0.1 percentage point of gross domestic product (GDP) growth for every 1 percentage point increase in public investment as a share of GDP.

According to Dorsati, continued weak revenue collection and increasing spending, including the planned salary increases for civil servants and accelerated investment public investment, are expected to widen the fiscal deficit to 1.6 percent of GDP in 2024, before narrowing to 1.1 percent in 2025, in line with the country’s Fiscal Strategy for 2021-2030.

Ensuring the stability of the financial sector remains paramount, with a focus on managing potential risks associated with increasing bad debts, including the decline in asset values in the real estate market, she said.

Sebastian Eckardt, World Bank Practice Manager for Macroeconomics, Trade and Investment in the East Asia and Pacific Region said investing in public infrastructure projects often creates long-term benefits alongside immediate economic stimulation.

“Strengthening public investment management will also address critical infrastructure bottlenecks in energy, transportation and logistics, which are the foundation for Vietnam’s long-term economic growth,” he said.

The WB advises Vietnam to invest additional resources in improving support mechanisms and creating domestic funds to build an ecosystem in order to help innovative businesses

Nurturing innovation culture

In order to nurture an innovation culture, experts from the WB made several key recommendations for the country. The WB advised Vietnam to invest additional resources in improving support mechanisms and creating domestic funds to build an ecosystem to help innovative businesses.

In addition, administrative and legal reforms should be sped up to address startups’ barriers in accessing funds and facilitating investment activities. The academic circle and public researchers should be encouraged to contribute to startups through incubators, idea development support, and innovative startup training centers, under a public-private cooperation model.

They said public researchers can greatly contribute to the modernization of intellectual property frameworks and technology transfer while providing incentives for researchers in the form of potential for commercialization.