Vietnam’s GDP growth could reach 6% in 2024: Shinhan Bank

Vietnam’s economic growth could reach 6% this year, thanks to improvements in public investment disbursement and the booming tourism sector, Shinhan Bank Vietnam said in its latest forecast.

Goldman Sachs's projection was 5.4%, Fitch Solutions 5.5%, World Bank 5.5%, the International Monetary Fund (IMF) 5.8%, Citigroup 5.9%, the Asian Development Bank (ADB) 6%, and Standard Chartered Bank 6%.

Shinhan Bank Vietnam’s estimation is also within the Vietnamese government’s target of 6-6.5% this year.

The South Korean bank said the disadvantages for Vietnam are prolonged high interest rates in the global economy and weak demand due to China’s economic underperformance.

Another issue is the U.S presidential race scheduled for November. If Donald Trump is elected, protectionism may revive, hurting trade with Vietnam. Vietnam’s large trade surplus with the U.S. poses a significant issue, the bank said.

Shinhan Bank Vietnam pointed out other problems, including the property market downturn and liquidity challenges, and large-scale corporate bonds maturing in 2024.

Regarding advantages for the economy, the lender highlighted Vietnam’s comprehensive strategic relations with the U.S., China, Russia, India, South Korea, Japan, and Australia. The elevated partnership with the U.S. should help Vietnam attract more foreign direct investment (FDI), amid the two countries’ cooperation in semiconductors and mining sectors.

Vietnam’s active approach to global integration is another strength, such as Vietnam’s participation in various free trade agreements that are helping to attract investments, Shinhan Bank Vietnam noted.

The bank also emphasized the growing tourism sector, which accounted for 9.8% of Vietnam’s GDP before the Covid-19 pandemic. This year, favorable factors for Vietnam’s tourism sector include the implementation of visa policy relaxations such as visa-free stays, extension of visa durations since last August, and a plan to allow foreign vehicles to enter Vietnam.

Besides, the strong public investment plan, with improved disbursements, could help stimulate economic growth and job employment, according to the bank. It lauded the disbursement of VND197.7 trillion ($7.81 billion) in the first half of this year, equivalent to 29.39% of the Prime Minister’s target of VND660 trillion ($26.07 billion).

In July, HSBC revised up its 2024 GDP growth projection for Vietnam from 6% to 6.5% after seeing a better-than-expected performance in Q2. That pace will likely make the country the fastest-growing economy in ASEAN in 2024, the UK-headquartered bank said.

Vietnam’s economic growth could reach 6% in 2024 and 6.2% in 2025, following a 6.4% expansion in the first half of 2024, the Asian Development Bank said in the July edition of its Asian Development Outlook.

Singapore’s leading bank UOB said it kept its GDP growth projection for Vietnam unchanged at 6% for this year, although the Q2 performance exceeded the bank’s and market expectations.