Moody’s Ratings forecasts Vietnam's 2025 GDP growth at 6.5-7%

Moody's Ratings has forecast Vietnam can reach a real GDP growth of 6.5-7% in 2025, the highest tally in the region.

In a Thursday note, Moody’s Ratings said the growth can benefit from the larger fiscal deficit target of 3.8% of GDP in Budget 2025 and the anticipated recovery in the real estate sector, bolstered by improved sentiment and financing conditions under new legal frameworks that came into effect in 2024.

However, challenges for Vietnam include potential shifts in the U.S. trade policies and the possible imposition of restrictions on trade by the United States.

The 6.5-7% project is lower than Vietnam's target of at least 8%. The National Assembly, Vietnam's legislature, on Wednesday set the 2025 economic expansion target at "8% or more"2025 economic expansion target at "8% or more" upon a government proposal, up from the 6.5-7% approved in November last year.

Moody’s Ratings also highlighted Vietnam’s strong performance of a 7.1% GDP growth in 2024, higher than 5.1% in 2023. “Such strong performance was driven by robust exports recovery, along with an acceleration in investment growth supported by foreign direct investments that continue to be forthcoming,” the rating agency emphasized.

Besides, Moody’s Ratings pointed out Vietnam’s “a2” economic strength balances the country's robust growth performance and large size (compared to peers) against low GDP per capita. The score is supported by rising competitiveness and a broadening transition to higher value-added industrial activity, Moody’s Ratings added.

Institutions and governance strength is scored at "ba3," reflecting a lengthening track record of maintaining macroeconomic stability amid robust growth, balanced by improving but limited predictability and transparency of policymaking, according to the rating agency.

In the mid-January edition of its “Global Economic Prospects” report, the World Bank said that Vietnam’s GDP growth can reach 6.6% in 2025. The figure is 0.6 percentage points higher than the figure in the June 2024 edition.

Singaporean bank UOB on January 9 raised its forecast for Vietnam’s GDP growth in 2025 to 7% from 6.6% last October. The prediction took into account the strong momentum carried over from 2024 as well as risks and potential downside from the new US administration's further trade frictions.