Vietnam will continue promoting growth while maintaining macroeconomic stability, controlling inflation, and ensuring major economic balances. The goal is to strive for a growth rate of around 7.5-8% in the fourth quarter of 2024 and over 7% for all of 2024.

Raising growth forecasts

Although facing many difficulties and challenges, the economy is showing signs of recovery, achieving high growth rates in the third quarter. Fundamentally, Vietnam’s economy has regained its growth momentum as before the COVID-19 pandemic, with several highlights, particularly in industrial production, exports, and attracting foreign direct investment (FDI).

According to the General Statistics Office, the economy achieved positive growth in the first nine months of 2024 despite the agricultural, forestry, and fishery sectors being affected by unusual weather. This was offset by impressive growth in the industrial and service sectors, with the industrial sector growing by 9.59%, the highest this year.

In its October 2024 update on the economic situation in East Asia and the Pacific, the World Bank (WB) noted that Vietnam’s growth forecast for 2024 and 2025 is still expected to be lower than pre-pandemic levels. However, the WB revised its economic growth forecast for Vietnam upward from its April 2024 estimate, raising it from 5.5% and 6% to 6.1% and 6.5%, respectively. The International Monetary Fund (IMF) also forecasts that Vietnam’s economic growth will reach 6.1% in 2024, driven by strong external demand, stable foreign direct investment, and the government’s fiscal and monetary support policies.

Domestic demand is expected to gradually recover as businesses overcome credit difficulties, with the real estate sector anticipated to recover fully in the medium term. The IMF forecasts that inflation in 2024 will hover around the target of 4-4.5%; however, the economy also faces declining growth risks as its main driver, exports, may weaken due to uncertain global growth prospects amid geopolitical tensions or trade disputes. Additionally, monetary easing could pressure the exchange rate, leading to higher domestic inflation. UOB Bank in Singapore recently adjusted its growth forecast for Vietnam in 2024 from 5.9% to 6.4%, thanks to positive cumulative results achieved in the third quarter.

Deputy Minister of Planning and Investment Tran Quoc Phuong stated that, based on third-quarter results, the Ministry of Planning and Investment updated its growth scenario and recommended 7.5-8% growth for the fourth quarter to achieve over 7% rate for the whole year. This recommendation is based on several factors, including the positive growth trends in various economic sectors, quick recovery efforts in northern agricultural production and tourism following Typhoon Yagi (Typhoon No. 3), the need to accelerate state-sector investments, maintaining strong FDI and export growth, effectively leveraging the domestic market, and exceeding the goal of attracting international tourists.

Boosting growth from two economic hubs

Due to the impact of Typhoon Yagi, the focus in the fourth quarter has expanded to include disaster recovery, accelerating production, and driving economic growth. “One aspect of the government’s strategy, advised by the Ministry of Planning and Investment, is for regions unaffected by the storm with high growth potential to step up efforts to compensate for the losses of affected regions. There are two key regions that, if they achieve higher growth, will significantly boost national growth, including Hanoi and Ho Chi Minh City. These are the main engines of growth for the whole country,” said Deputy Minister Tran Quang Phuong.

However, according to economic experts, it will take a tremendous effort to compensate for these losses, as Ho Chi Minh City and Hanoi have underperformed relative to their potential in recent years. In the first nine months of 2024, Hanoi’s Gross Regional Domestic Product (GRDP) grew at only 6.12%, below the national average, while Ho Chi Minh City’s GRDP growth reached over 6.8%. Currently, the city’s departments and agencies are working hard to implement Directive No. 12, dated August 12, 2024, from the Ho Chi Minh City People’s Committee on Economic Growth Solutions through 2025, aiming for GRDP growth of at least 7.5% in 2024 and 8-8.5% in 2025; targeting a digital economy contribution of 22% and 25% respectively; and aiming for a 6.5% increase in the industrial production index (IIP) in 2024.

Director General of the General Statistics Office, Nguyen Thi Huong, stated that despite the positive GDP growth in the past three quarters, Vietnam’s economy still faces challenges in the remaining months of 2024, especially since the main growth drivers like exports are expected to slow, and the service sector has not grown as strongly as anticipated. The government, ministries, and localities need to implement comprehensive and synchronised measures to promote economic growth in the last months of 2024 and create momentum for subsequent years.

These measures include ensuring macroeconomic stability, effectively controlling inflation, and stabilising the exchange rate. It is also advisable to continue policies to maintain price stability to protect consumer purchasing power and prevent exchange rate fluctuations that could affect imports and exports. Additionally, it is crucial to stimulate consumption through effective demand-boosting programmes, such as discounts, promotions, and incentives, while enhancing the distribution of goods via digital platforms and e-commerce to increase purchasing power and domestic consumption. Public investment disbursement should be accelerated, particularly in transportation, and support should be given to businesses to enhance competitiveness through technological innovation, green transformation, and digital transformation.