'Trump' a keyword in economic outlook for 2025: Dragon Capital exec

The biggest unknown and major factor affecting global economic outlook in 2025, including that of Vietnam's, will be Donald Trump's second term as U.S President, says Le Anh Tuan, head of Investment at Dragon Capital Group.

Addressing the Vietnam Investment Forum 2025 in Ho Chi Minh City Friday, he said Trump's second term will have a big impact on the global economy.

"Trump version 2 is not only about trade but also about some monetary policies," Hung noted.

Dragon Capital is one of the biggest foreign-run fund managers in Vietnam.

The Federal Reserve (Fed) on Thursday approved its second consecutive interest rate cut. In a follow-up to September’s big half percentage point reduction, the Federal Open Market Committee lowered its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points, to a target range of 4.5%-4.75%.

Chairman Jerome Powell mentioned the possibility that the Fed will lower the rate by another 25 bps at its meeting in December. He did not comment on the economic situation and interest rate trends in 2025.

According to Tuan, the reason Powell did not give a forecast for 2025 "is because when Trump takes office, it is likely that he will want a strong dollar.

"When Trump was re-elected, bond yields immediately increased sharply. That means that when interest rates in the US remain high, our space for monetary policy will be narrowed."

Tuan pointed out further that when Trump was projected to win, the Chinese stock market still went up because Beijing has prepared very strong stimulus packages that would be launched based on the election results.

"When it is taxed highly, the possibility of China devaluing its currency is very high. When China implements this policy, the Vietnamese economy will have its own pressures", he said.

Tuan said he believed that the keywords for 2025 will be “Trump” and “volatility”.

Nguyen Ba Hung, chief economist with the Asian Development Bank (ADB) in Vietnam, believes that the important keywords for Vietnamese and world economies in 2025 are “trade” and “trade war”.

Hung explained that the inflation war among high-income countries has basically achieved its target and the trend of decreasing interest rates has become clear. In 2024, the European Central Bank (ECB) has lowered interest rates three times, a total of 75 to 110 bps. The Fed was slower but has also lowered interest rates twice by a total of 75 bps.

“With the story of inflation and interest rates behind us, one of the big unknowns in the coming time is the new U.S administration.

"What makes it difficult for people to assess is whether Donald Trump will do what he said and to what extent. The variables included the level of tax increases and restrictions that the new Trump administration will impose," Hung said.

"The new administration will not necessarily do what Trump promised during the election. But certainly Trump's policies will have an impact on world trade”, he added.

Because Vietnam's economy is significantly export-oriented, it will face challenges in the context of difficulties in global trade policies, Hung cautioned.

To deal with this situation and mitigate likely impacts, it was necessary that in addition to promoting the advantages of foreign economic relations, there was a focus on stimulating domestic demand, stimulating investment, and helping the economy recover better.

Domestic demand should be turned into a driving force for growth, he added.