2024 will be a promising year for Vietnam

The year 2023 has just ended with many difficulties and challenges for the global economy. How do you evaluate the world economic picture in the past year?

2023 is truly a difficult year for the world economy due to continuous interest rate increases from major central banks such as the US Federal Reserve Bank, European Central Bank, Bank of England, and the Bank of England. Reserve Bank of Australia and even regional central banks such as Indonesia and Malaysia.

At the same time, geopolitical factors such as the Russia-Ukraine conflict and US-China tensions continue to increase pressure on general sentiment as well as business activities. This has led to a slowdown in trade activities, affecting trade-dependent countries such as Vietnam and other ASEAN countries.

In the context of general difficulties of the global economy, Vietnam also faces many difficulties in export activities, attracting FDI, public investment…, however, Vietnam still achieves positive growth with an increase GDP growth is estimated at 5.05%. How do you evaluate this growth rate of Vietnam?

Vietnam is the country with the second largest trade dependence in the ASEAN region (total trade value accounts for about 186% of GDP in 2021, according to World Bank data), second only to Singapore (with Trade value accounts for about 337% of GDP in 2022). Therefore, Vietnam is greatly affected when demand from foreign markets declines.

We have revised down Vietnam’s growth forecast for July, to 5.2% (vs. 6% forecast) due to continued decline in trade data. Although 5.05% is lower than the official forecast of 6-6.5%, this is still an achievement in a difficult context, when the State Bank of Vietnam (SBV) has also lowered interest rates to Support domestic businesses and consumers.

Ông Suan Teck Kin - CFA, Managing Director of Market Research and Development Department  Global Economics, UOB Group.
Mr. Suan Teck Kin – CFA, Managing Director of Market Research and Global Economics, UOB Group.

Many forecasts say that the global economy in 2024 will not be easy and will continue to face many difficulties. However, international organizations and experts are still optimistic about Vietnam’s GDP growth picture in 2024, at over 6%. As someone who has carefully researched the Vietnamese economy, do you think this growth rate is too optimistic and what is the main growth driver of the Vietnamese economy in 2024, sir?

I think the 6% growth forecast is a reasonable and feasible target for Vietnam in 2024. For 2024, we expect business performance to improve and foreign trade (export) ) will improve further especially in the second half of 2024, assuming the US Federal Reserve Bank will start cutting interest rates in June 2024. Meanwhile, data from the semiconductor industry suggests improvement in sales, which will support Vietnam’s export businesses in the technology sector.

It should be noted that FDI inflows into Vietnam broke a record at 23.2 billion USD in 2023 compared to 22.4 billion USD in 2022 even though last year was a relatively difficult year, this shows that companies are still recognizes the value and opportunities in this country and will continue to lay the foundation for many business activities in the coming years.

UOB forecasts 6% growth for Vietnam in 2024 as the economy recovers further, returning to pre-pandemic growth levels.

2024 will be a promising year for Vietnam - Photo 1

To achieve high growth as forecast, what do you think Vietnam needs to do and what policies should it promote in 2024?

Growth of 6% is not considered high. Because if this number is correct, the average index for 2023 and 2024 is only 5.5%. Before the pandemic, Vietnam regularly achieved growth rates of over 7%. Foreign trade turnover (exports, imports) will be important for Vietnam, and the recovery of the semiconductor industry suggests that Vietnam’s exports could have a better year than 2023; The SBV is also playing an important role as its interest rate cuts and credit policies continue to support businesses and consumers.

In your opinion, which sectors of Vietnam in 2024 will be key sectors, providing good support for economic growth?

In 2024, the recovery in the technology cycle will be a driving factor for technology-related sectors and its supply chains to achieve better results. Next, agriculture is also an important industry in Vietnam. In a year where geopolitical tensions continue to be a major concern globally, with many countries expressing concerns about food supply and availability, Vietnam still stands in a favorable position as a is a major producer of rice and other agricultural products. In addition, sustainable energy projects will continue to have further developments and needs, specifically in the fields of electric cars and alternative energy such as solar energy and wind power.

Vietnam-US diplomatic relations in 2023 will be upgraded to a comprehensive strategic partnership. Many promises that the wave of US investment in Vietnam in the coming time will increase sharply. How will this impact Vietnam’s economic growth trajectory in 2024 and the years to come?

The diplomatic relationship and comprehensive strategic partnership between Vietnam and the United States will ensure increased US investment and technology in Vietnam, as well as Vietnam’s access to the US market. . This is important because the United States is the largest export market and also the largest contributor to Vietnam’s trade surplus. Maintaining these conditions will contribute significantly to Vietnam’s trade and economic growth.

How do you see Vietnam’s financial picture in 2024? What has left the most impression on you about the State Bank’s operating policy?

The quick response in reducing interest rates in 2023, even though interest rates are rising worldwide, shows that the SBV has a sharp awareness and response to the actual situation and challenges. This was not easy because other central banks were moving in the opposite direction at the time. Thanks to that, Vietnam’s economy was supported and achieved growth of 5.05%.

Overviewing the Vietnamese economy in general and the financial market in particular in 2024, what words can you use to describe it?

2024 will be a promising year for Vietnam!

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