The strong inflows of foreign direct investment will likely continue in 2024, buttressing Vietnam’s manufacturing sector, said James Cheo, chief investment officer for Southeast Asia and India, Global Private Banking and Wealth, at HSBC.
The strength of Vietnam's economy in 2024 will come from a combination of consumer and investment spending, Cheo noted in HSBC’s latest report on global investment outlook.
The nascent recovery of the global trade cycle will boost Vietnam’s exports. Furthermore, the country is likely to witness a gradual uptick in international tourism. “All in all, we expect Vietnam's economy to grow by 6% in 2024, faster than in 2023,” said Cheo.
The HSBC executive sees Vietnam’s inflation fairly stable but there could be an upside risk from higher-than-expected energy or food prices.
“Vietnam’s monetary authority will stay vigilant and keep policy rates on hold for this year. We forecast the Vietnamese dong to move towards 24,400 against the USD by the end of 2024,” he noted.
Suan Teck Kin, executive director at UOB Global Economics & Market Research, earlier this month noted that Vietnam was in a good position to attract more FDI after having attracted a record of $36.6 billion last year despite external trade headwinds.
The figure indicates that a lot of companies still see Vietnam as an attractive destination over the next five years as supply chain shifts continue with the ongoing regionalization trend, Teck Kin added.
Speaking at a webinar last week, Can Van Luc, chief economist of state-owned bank BIDV, and Ho Quoc Tuan, senior lecturer at the School of Accounting and Finance of University of Bristol, were upbeat about Vietnam’s 2024 economic outlook.
They highlighted the continued upward trend of FDI, the government's further optimization of public investment allocation, and the controllable inflation rate.
Vietnam's economic growth forecast this year, whether it is 5.5% or 6.5%, is one of the fastest-growing countries in Asia. Solid FDI and remittances are strong support for economic growth, said Tuan.
However, they raised concerns about problems such as insufficient labor skills, power shortages, and lower-than-expected growth of major global economies.