In its headline 2024 resolution on socioeconomic development and state budget estimates for the year, the government underlined massive challenges at home and abroad that may continue hurting the domestic economy, including geopolitical tensions and shrinking demands for consumption. However, the resolution highlighted efforts to reach an ambitious target of 6-6.5 per cent growth.

This rate, according to the Ministry of Planning and Investment (MPI), will be feasible and based on an uptrend of economic growth since mid last year.

After growing 3.32 per cent on-year in Q1 2023, the Vietnamese economy bounced back to 4.14 per cent on-year in Q2, 5.33 per cent on-year in Q3, and 6.72 per cent in Q4. The whole-year rate hit 5.05 per cent, which is highlighted by Party General Secretary Nguyen Phu Trong to be high as compared to other countries in the region and beyond. “For the first time, our country’s GDP exceeded $400 billion, ranking third in ASEAN and among the 40 largest economies in the world and the top 20 economies in terms of trade and foreign investment attraction,” he stated.

Prime Minister Pham Minh Chinh added, “Our economic growth has witnessed quarter-after-quarter recovery, and the 5.05 per cent growth rate for the whole 2023 has put Vietnam on the list of nations with high growth in the region and wider world. Many high-profile international organisations have highly evaluated the outcomes and prospects of the Vietnamese economy.”

PM Chinh stated that despite difficulties, the domestic business and investment climate has continued its improvements. The Vietnamese economy witnessed over 159,000 enterprises newly established, with total registered capital of $64.2 billion and employed 1.05 million individuals – up 7.2 per cent in the number of enterprises, down 4.4 per cent in capital and 7.3 per cent in workers, all compared to those in the same period last year.

In the January-December 20 period of 2023, Vietnam wooed a total of $36.6 billion in newly registered capital, newly added capital, and capital contribution and stake acquisition, which was up 32.1 per cent as compared to 2022. In 2023, total disbursed foreign direct investment is estimated to hit nearly $23.2 billion, up 3.5 per cent on-year.

Nevertheless, Party General Secretary Trong and the government said more efforts must be made to reach a higher growth rate as targeted. Improvements in institutions, infrastructure, and education must be accelerated, especially in reviewing legal regulations as a priority in favour of enterprises and individuals.

The government also requires ministries and localities to cut and simplify administrative procedures, improve the business climate, and facilitate and reduce costs for investment and business activities.

According to the MPI, Vietnam’s industrial production in Q4 of 2024 grew “more positive” than that in Q3, with an added value estimated to climb 6.86 per cent on-year. The on-year increases of such a value were 5.51 per cent in Q3, 0.86 per cent in Q2, and -0.73 per cent in Q1. In 2023, it ascended 3.02 per cent on-year, in which the manufacturing and processing industry expanded 3.62 per cent. The on-year added value of this industry rose from -0.45 per cent in Q1 to 0.46 per cent in Q2, 5.59 per cent in Q3 and 7.97 per cent in Q4.

Meanwhile, the total retail and consumption service revenue in 2023 is estimated to reach more than $262.94 billion, up 9.6 per cent on-year. Goods retail revenue last year is estimated to hit $205 billion, accounting for 78 per cent of the total and up 8.6 per cent on-year. The price of many key groups of items also expanded, such as cultural and educational items (14.4 per cent); food and foodstuffs (11.7 per cent); home appliances (7.5 per cent); and garments and textiles (7.1 per cent).

In addition, last year saw strong recovery of the tourism sector, with 108 million domestic visitor arrivals – up 5.8 per cent as compared to the initial target, and 12.6 million foreign visitor arrivals – up by 3.4 times from the previous year and far from the initial target of eight million. The tourism sector reaped an estimated revenue of about $15.94 billion, up 52.5 per cent against 2022. Revenues increased strongly in many localities, such as Danang (133.8 per cent), Ho Chi Minh City (68 per cent), Hanoi (47.5 per cent), Haiphong (42 per cent), and Can Tho (29.1 per cent).

Global analysts FocusEconomics told VIR that in Q1, it is expected that Vietnam’s GDP growth will rise further, buoyed by likely ongoing rebounds in industrial output and exports amid stronger global electronics demand.

“When it comes to GDP outlook, Vietnam will be among the fastest-growing ASEAN economies in 2024. Improving global electronics demand should boost industrial output and goods exports, and the services sector will benefit from a rise in tourism,” FocusEconomics said. “Our panellists see GDP expanding 5.9 per cent in 2024 and 6.4 per cent in 2025.”

Pham Minh Chinh, Prime Minister In 2024, we need to prioritise boosting economic growth, firmly maintaining economic stability, controlling inflation, and ensuring major balances of the economy. We will continue to operate the monetary policy flexibly and effectively, while coordinating harmoniously with focused fiscal policy and other policies. It is necessary to promote traditional growth drivers such as investment, export, and consumption, while also promoting new growth impetuses including regional connectivity; science and technology; innovation; digital transformation, green transformation; and emerging industries such as semiconductor and hydrogen. We will also continue consolidating traditional markets and expand markets such as the United Arab Emirates, Africa, and Latin America. It is also needed to accelerate the disbursement of public investment capital and national target programmes. Efforts are also to be made to increase revenue and save state budget expenditure, strictly control overspending, public debt, government debt, and national foreign debt. We will have to save 5 per cent of expenses and increase state budget revenue by at least 5 per cent in 2024. In addition, we will promote the substantive implementation of strategic breakthroughs. We will also continue to reduce and simplify administrative procedures and business regulations. At least 10 per cent of costs for compliance with administrative procedures and business regulations must be cut by 2024. The construction progress of key transportation projects, especially Long Thanh International Airport, must be sped up, while there is a need to submit to authorised agencies for approval of investment policies for the North-South high-speed railway project. Moreover, the Power Development Plan VIII must be effectively deployed, while the development of high-quality human resources associated with sci-tech and the promotion of startups and innovation must also be boosted. Importance is to be attached to training high-quality human resources for emerging industries, with a goal to produce 50,000-100,000 high-quality engineers for the semiconductor manufacturing industry from now to 2030. Furthermore, efforts are to be made effectively and substantively implement economic restructuring associated with innovating growth models towards a green sustainable direction, with the development of the digital economy, green economy, circular economy, and other emerging fields. Industries, especially in processing, manufacturing, and semiconductor manufacturing, must be recovered and developed strongly, with efforts to be made for the industrial production index to increase by 7-8 per cent in 2024, when exports of high-tech products accounting for over half of total export value. We also need to promote restructuring of the agricultural sector associated with new rural development, and implement the initiative developing one million hectares of clean, low-carbon rice growing land. We will also make efforts to have 80 per cent of communes meeting new rural standards by the end of 2024. In addition, it is necessary to drastically restructure the system of credit institutions associated with handling bad debts and addressing the remaining slow-moving and ineffective state enterprises. Next, we will continue strongly developing cultural and social fields, ensure social security, and improve the material and spiritual life of the public. We must continue to effectively carry out the conclusion by Party General Secretary Nguyen Phu Trong at the National Cultural Conference and the conclusion of the Politburo. A focus is to be placed on building and submitting for promulgation the national target programme on cultural development and cultural industry development. We must effectively deploy of the central resolution on social policy, and the project to build at least one million social houses, with a goal to have at least 130,000 units completed by 2024. Moreover, it is needed to implement salary policy reform for the public sector from this July, with continued implementation of salary reform in the non-state sector. *Excerpt from remarks at conference on Vietnam’s socioeconomy 2023-2024, January 1, 2024