Vietnam GDP growth forecast at 6% in 2024, third highest in ASEAN: research unit AMRO

Vietnam’s GDP growth could reach 6% in 2024 and 6.5% in 2025, higher than the 5.1% posted in 2023, according the ASEAN+3 Macroeconomic Research Office (AMRO).

Vietnam’s 6% figure for 2024 is the third highest in the region, only behind the Philippines with 6.3% and Cambodia with 6.2%.

For 2025, the country’s 6.5% figure could top the region, on the same level as the Philippines, said AMRO's ASEAN+3 Regional Economic Outlook April edition.

Other countries with high anticipated growth are China with 5.3% in 2024 and 4.9% in 2025; Indonesia with 5.2% for 2024 and 5.2% for 2025, and Malaysia with 5% in 2024 and 4.7% in 2025.

AMRO forecast the ASEAN+3 bloc (+3 countries being China, Japan, and South Korea) could reach growth of 4.5% this year, before slowing to 4.2% in 2025. The growth for ASEAN is expected at 4.8% and 4.9% in 2024 and 2025, respectively.

Regarding inflation, AMRO predicted Vietnam’s figures at 3.6% in 2024 and 2.7% in 2025, lower than the ASEAN average of 5.2% and 4.4%, respectively.

"The stronger growth momentum this year will be mainly driven by robust domestic demand, with the anticipated turnaround in exports and the continued recovery of tourism providing additional tailwinds," AMRO highlighted about ASEAN’s development.

"ASEAN economies, with Vietnam at the forefront, have gained global market shares and attracted foreign direct investment (FDI) amid the ongoing trade reconfiguration. In sectors where China’s global export shares have fallen, ASEAN has partially substituted for China’s losses, though to a lesser extent than the European Union," it commented.

AMRO emphasized that this trend is underscored by substantial and growing FDI inflows. "Vietnam has become a preferred destination for FDI from economies such as South Korea, Singapore, Japan, and China, due to its cost-competitive and abundant workforce, growing domestic market, and stable political environment, among other factors."

“The country’s increasing appeal as a favorable alternative manufacturing location has occurred together with widespread adoption of the “Plus One” strategy by manufacturers. As a result, the U.S. has been increasing its investments in Vietnam, particularly in high-tech sectors. Meanwhile, China has extended its FDI flows to Vietnam toward more advanced sectors such as electronics, semiconductors, and energy storage (batteries),” AMRO added.

In a report released last week, HSBC said that given a weaker-than-expected Q1 GDP growth, it had kept its Vietnam economic expansion forecast unchanged at 6% for 2024.

Earlier last week, UOB bank predicted that Vietnam would grow 6% this year, compared to the official 6-6.5% growth target.