WB revises down Vietnam’s GDP growth forecast to 4.7% in 2023, 5.5% in 2024

The World Bank has revised down its Vietnam GDP growth forecast to 4.7% in 2023 and 5.5% in 2024, according to the bank’s October edition of its East Asia and The Pacific Economic Update.

The figures are lower than the forecast of 6.3% for 2023 and 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.

Vietnam’s figure in 2023 is lower than the East Asia & Pacific’s average growth rate of 5%. Excluding China, the figure is 4.6%, slightly smaller than Vietnam’s estimated growth. In Southeast Asia, the highest figure of 5.6% belongs to the Philippines, followed by Cambodia with 5.5%, Indonesia with 5%, and Vietnam with 4.7%.

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%.

Reviewing the macro financial policies in the region in the last decade, the World Bank said credit is growing in most countries, driven by various factors, such as removal of pandemic-related restrictions.

"While this is positive to economic growth, rapid lending growth and overexposure to the real estate market have raised concerns, such as in Vietnam. Vietnam has introduced measures to respond to the situation in April," the bank added.

The WB recommended that the Vietnamese authorities should facilitate banks to strengthen their balance sheets, such as by improving the capitalization and asset management, while updating the legal and regulatory foundations for better micro- and macro-prudential supervision, bank resolution, and crisis management.

Vietnam’s economy continued its recovery with GDP growth of 5.33% year-on-year in Q3/2023, accelerating from 3.28% posted in Q1 and 4.05% in Q2. January-September growth reached 4.24%. This figure is lower than the same periods from 2011 to 2022, except for 2.19% in 2020 and 1.57% in 2021, the General Statistics Office (GSO) reported in September.

Despite ongoing efforts to accelerate public investment disbursement and other measures, Vietnam’s economic growth is unlikely to exceed 6% this year, said Minister of Planning and Investment Nguyen Chi Dung. "The proposed scenarios are very challenging, requiring authorities at all levels, sectors and localities to promote internal resources and take advantage of external opportunities for the highest growth in the fourth quarter, creating momentum for 2024," the minister stressed.