Vietnam economic outlook 2024: Positive signals mixed with challenges

2023 is recognized as a “turbulent” year for the Vietnamese economy, when difficulties arise from falling export orders, a gloomy real estate market, and high interest rates since the end of the year. 2022,… has caused GDP growth to only reach 5%, unable to “reach” 6.0-6.5% as set target, although the Government and ministries have made great efforts.


However, by the end of the year, the picture was brighter with growth of 6.7% in the fourth quarter. The main drivers for the recovery were (i) exports gradually returned to grow by 8.8%. % in Q4; (ii) public investment disbursement is accelerated faster than previous years, total capital implemented from the State budget for the whole year 2023 grows by 21%, gradually creating a spillover effect to other areas of the economy; (iii) FDI attraction tends to improve positively, registered capital increased by 32% and disbursed capital increased by 3.5% with a higher increasing trend in the second half of the year.

Vietnam economic outlook 2024: Positive signals mixed with challenges - Photo 1

Entering 2024, exports, public investment and FDI are expected to continue to be the driving forces to support economic growth.

Exports are expected to return to growth, thanks to the recovery of the global technology market, helping to improve demand for key products such as electronics, computers, and phones. In addition, agricultural product exports such as rice, coffee, etc. continue to be a fulcrum, benefiting from high international prices due to tight supply.

For public investment, the Government has assigned a 2024 plan with a capital of more than 677 trillion VND, compared to the estimated implementation level in 2023 of 580 trillion VND. Disbursement progress in key projects such as North – South expressway phase I and II, Long Thanh airport phase 1, Bien Hoa – Vung Tau expressway, Ring Road 3 city. Ho Chi Minh City, Ring Road 4 Hanoi, etc. have had a clear acceleration trend since the second half of last year thanks to the close and drastic urging solutions of the Government and management agencies. Thanks to that, the bottleneck somewhere has been resolved and it is expected that public investment disbursement in 2024 will continue to accelerate, the amount of realized capital can reach 90-95% of the plan and increase 5-10% compared to the previous year. last year.

FDI capital flows into Vietnam continue to have promising prospects, growth can reach 8%/year in 2024 as well as in the next few years. With a stable socio-economic environment, abundant human resources, actively promoting free trade agreements and upgrading comprehensive strategic partnerships with leading economies, Vietnam is considered has a lot of potential to attract international investment capital flows, especially from new topics such as the trend of shifting global supply chains, high-tech fields, semiconductors,…

Source: GSO, compiled and forecasted by authors.
Source: GSO, author compiled and forecast.

In addition, more favorable conditions also come from the downward trend of interest rates, starting from the second half of 2023. In 2024, the State Bank will continue to have favorable grounds to maintain its orientation. Loosening monetary policy, prioritizing growth support: (i) Inflation is well controlled with CPI in 2023 at an average level of 3.25%, lower than the threshold of 4.5% set by the Government, In the forecast, inflation pressure in 2024 is not too great; (ii) The USD/VND exchange rate remains relatively stable even though interest rates and the USD are anchored at quite high levels in the international market. Lending interest rates are therefore expected to be reduced more clearly, promoting demand for credit loans and increasing investment of individuals and businesses.

Source: GSO, author's own compilation.
Source: GSO, author’s own compilation.


Mixed with the positive growth numbers at the end of 2023, there are still some indicators showing that the prospects for production and export activities have not really improved. For example, the manufacturing PMI index has remained below 50 points in the last 4 months; or a survey by the General Statistics Office showed that only 24.6% of businesses positively evaluated export orders in the first quarter of 2024, compared to 28.6% negatively evaluated. These data show that the path to conquering the growth target of 6.0-6.5% for the Vietnamese economy this year is not necessarily simple.

Vietnam economic outlook 2024: Positive signals mixed with challenges - Photo 2

Not to mention, external demand is still quite unstable in the context of a not really promising global economic picture, with challenges such as inflation and high interest rates, and geopolitical risks such as in the Red Sea recently affecting trade activities.

International organizations such as the World Bank, IMF, OECD,… all lowered the global economic growth outlook for 2024 to be lower than 2023, forecasting an increase of about 2.4-2.9%; in which the US – Vietnam’s largest export partner, is forecast to slow down to 1.5% growth compared to 2.1% last year. Geopolitical tensions also pose a potential risk of supply chain disruption, causing energy prices and transportation costs to increase, causing difficulties for Vietnamese manufacturing enterprises.

Meanwhile, domestic driving forces such as private investment and consumption are still facing certain difficulties and part of the reason comes from the somewhat gloomy developments of the real estate market. The ability of the real estate sector to recover in 2024 is still a big unknown due to problems on both supply and demand sides.

Vietnam economic outlook 2024: Positive signals mixed with challenges - Photo 3

On the supply side, real estate businesses continue to face financial pressure, cash flow difficulties or legal problems. The bright spot is the revised Land Law, along with other laws such as the Real Estate Business Law and the revised Housing Law recently passed by the National Assembly, with many contents expected to solve problems. for the market sales. However, these complex issues may still need more time to truly be cleared up.

On the demand side, the real estate market in the coming period is oriented to develop in a way that focuses on real needs and limits speculation. However, actual demand is unlikely to improve in the short term in the context that the market still has a significant mismatch between supply and demand; between segments. In fact, comparing housing prices in Vietnam’s largest city with some countries in the region, Vietnam’s house price-to-income ratio is quite high, equivalent to China and high. more than many other countries.

Vietnam economic outlook 2024: Positive signals mixed with challenges - Photo 4

The picture of Vietnam’s economic growth in 2024 is expected to have more bright, positive colors compared to 2023 and the growth rate will also improve accordingly. Vietnam still retains its own attraction and strong development potential in the medium and long term. However, facing existing challenges from both the internal and external environment in the short term, to soon return to the familiar 6.0-6.5% growth area, Vietnam may still need additional resources. Strong breakthroughs from important economic drivers such as public investment, foreign direct investment, exports or the real estate market in addition to strong administrative reform.

The author is a member of the Vietnam Interbank Research Association. The full content of the article was published in Vietnam Economic Journal No. 06-2024 published on February 5, 2024. Dear readers, we invite you to read hereThis

: Kinh-te-viet-namVietnam economic outlook 2024: Positive signals mixed with challenges – Photo 5

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