Vietnam planning ministry opts for 6.5% growth scenario after Q1 acceleration

The Ministry of Planning and Investment, the government's principal economic advisory body, has proposed targeting GDP growth of 6.5% this year, the mandatory upper limit, after the first-quarter pace hit a five-year high.

Minister Nguyen Chi Dung made the proposal at a regular cabinet meeting on Wednesday, citing more favorable global and economic conditions and the rollout of more fiscal and monetary incentives.

Vietnam’s economy expanded 5.66% in the first quarter, the highest figure for that period since 2020, according to government data.

According to Singapore-based UOB researchers, Vietnam recorded “a promising start for the year”, showed by an acceleration in external trade.

They were upbeat about Vietnam’s prospects this year, thanks to the recovery in the semiconductor cycle, stable growth in China and the region, and the likely easing of monetary policy by major central banks in the months ahead.

For full-year growth to reach 6.5%, the economy needs to grow 6.75% in the remaining three quarters, including 6.32% in Q2, 6.79% in Q3, and 7.08% in Q4, Dung said.

In another scenario, the local economy would grow 6%, the lower limit set by the parliament, with a rate of 6.12% for the rest of the year.

To ensure the target is met, Dung suggested the government draft guidelines for the implementation of the revised laws on land, credit institutions, housing, and real estate businesses.

In addition, three drivers – investment, consumption, and export – need to be bolstered and renewed while more measures should be taken to take advantage of new engines such as digital and green transition.

The minister also recommended soon materializing agreements reached between Vietnamese leaders and their foreign counterparts; revving up administrative reforms; and keeping macroeconomic fundamentals steady.

Both UOB and the World Bank have retained their respective 2024 growth projections for Vietnam at 6.5% and 5.5%.

The Asian Development Bank (ADB) expects Vietnam to grow 6%, while HSBC anticipates 6.3% growth. Standard Chartered and S&P see Vietnam expanding 6.7% and 6.8% this year, respectively.