Vietnam GDP growth can reach 5-6.7% in 2024: finance institutions

Foreign organizations have expressed a positive outlook about Vietnam’s GDP growth next year on the basis that the country’s economic growth is likely to surpass 5% this year as forecast by Party General Secretary Nguyen Phu Trong.

World Bank

In the October edition of the East Asia and The Pacific Economic Update, the World Bank said Vietnam GDP growth could reach 5.5% in 2024. The figure is lower than the forecast of 6.5% for 2024 in the April edition of the report, but unchanged from its “Taking Stock August 2023: Making Public Investment Work for Growth” report.

For 2024, Vietnam’s projected growth of 5.5% is higher than the region’s average of 4.5%. In comparison with regional peers, Vietnam’s figure is only lower than Cambodia with 6.1% and the Philippines with 5.8%.

AMRO

The ASEAN+3 Macroeconomic Research Office (AMRO) expects Vietnam’s GDP growth to reach 6% in 2024, according to the office’s October edition of the "ASEAN+3 Regional Economic Outlook". Versus the July edition of the report, AMRO revised down the 2024 performance from 6.4%.

AMRO pointed out key factors for its estimation, including spikes in global commodity prices due to El Nino impacts, global export restrictions on food staples, reduction in oil supply; recession in the U.S. and Europe; slower-than-expected economic recovery in China due to weaknesses in the real estate sector and fiscal strains; and financial spillovers from tighter monetary policy in the U.S.

ADB

The Asian Development Bank (ADB) forecast Vietnam’s economic growth in 2024 at 6% in its December edition of the "Asian Development Outlook" (ADO). The prediction is higher than Indonesia (5%), Malaysia (4.6%), Singapore (2.5%), Thailand (3.3%) and the Southeast Asia average of 4.7%, but below the Philippines (6.2%).

The report says Vietnam’s weak growth of 4.2% in the first nine months of 2023 reflected the cumulative impact of falling external demand, weak budget execution, and sluggish recovery in jobs and domestic consumption. It says “economic growth is being impeded by lower industry and services output.”

Fitch Ratings

In the “Vietnam Banks - Peer Review 2023” report, Fitch Ratings emphasized Vietnam’s economic growth can improve to over 6.3% in 2024 and 7% in 2025, as external demand recovers and domestic headwinds subside.

In December, Fitch Ratings upgraded Vietnam's Long-Term Foreign-Currency Issuer Default Rating (IDR) to “BB+”, from “BB”, with a stable outlook. The upgrade reflects Vietnam's favorable medium-term growth outlook, underpinned by robust foreign direct investment (FDI) inflows, which Fitch Ratings expects will continue to drive sustained improvements in its structural credit metrics, the credit rating agency said.

The ratings agency forecast Vietnam’s medium-term economic growth of around 7%. The country’s cost competitiveness, educated workforce relative to peers, and entry into regional and global free-trade agreements bode well for continued strong FDI inflows amid global supply chain diversification.

Standard Chartered Bank

In October, Standard Chartered Bank lowered Vietnam’s 2023 GDP growth forecast to 5% from the previous 5.4%, while maintaining the country’s robust 2024 GDP growth forecast of 6.7%, with 6.2% in the first half and 6.9% in the second half.

Macroeconomic indicators show a tentative improvement while trade has yet to signal a clear manufacturing rebound. However, domestic recovery continues and is likely to strengthen further, with robust retail sales. External outlook is improving with the current account surplus rising to 3.5% of GDP in 2024 from 2.0% in 2023, the bank said.

HSBC

In November, HSBC forecast Vietnam’s 2024 economic growth at 6-6.5%. HSBC attributed the figure to “favorable base effects in the last two months of the year, export growth is likely to accelerate. This heralds the long-anticipated recovery in the trade sector, which is expected to lift growth.”

Going forward, it will be key for Vietnam to take advantage of free trade agreements and focus on matching its export products to international standards to further improve its market potential, HSBC stressed.

Encouragingly, Vietnam’s GDP growth is not limited to the external sector. After private consumption saw some marginal improvements in the third quarter of this year, retail sales continued to recover, growing 7% year-on-year, the bank highlighted.

OECD

Vietnam is likely to achieve GDP growth 6.6% in 2024, according to a report released by the Organization for Economic Cooperation and Development (OECD) in April. According to the OECD, the country's growth this year can be driven by growth in private consumption (6.4%), private gross fixed investment (6.3%), and net exports’ contribution to GDP growth of one percentage point.

As a result, Vietnam’s nominal GDP can increase to $451.7 billion in 2023 and $494.4 billion in 2024 from $410.6 billion in 2022.

The OECD noted factors backing Vietnam’s developments, including pandemic precautions being lifted, foreign investments recovering, stimulus packages boosting growth, and China’s updates to its Covid-19 policy.