Vietnam is largely dependent on international trade, with exports accounting for 90% of the country’s GDP. (Illustrative image: VNA)

Vietnam is likely to secure high annual growth of 8%, or even double-digit rates after recording a 7% expansion last year, according to Suan Teck Kin, executive director of Global Economics and Markets Research at Singapore-based United Overseas Bank (UOB).

The National Assembly (NA)’s recent decision to raise Vietnam’s GDP growth target to at least 8% in 2025 and double-digit rates in the 2026-2030 period shows a high level of consensus across the political system for the country's new development goals, despite many challenges facing the economy.

Suan Teck Kin said that achieving these targets will be a significant challenge. Among the risks, the US tariff policies could impact one of Vietnam's key growth drivers, which is international trade.

He pointed out that Vietnam is largely dependent on international trade, with exports accounting for 90% of the country’s GDP, the second highest in ASEAN after Singapore with 174%.

In addition, the US is Vietnam’s largest export market, making up 30% of its total export turnover. Therefore, if the US imposes tariffs on Vietnamese goods, the manufacturing and service sectors would be significantly affected.

Export demand may decline due to a slowdown in global economic activity, thus impacting GDP growth. The semiconductor cycle is also weakening, affecting the country’s high-tech exports. FDI inflows may slow down, as investors consider shifting to countries less likely to face US tariffs.

According to experts from UOB Bank, there are several sectors Vietnam can focus on to increase the chances of achieving a high growth rate of 8% in 2025 or even double digits in the next five years. However, the growth rate needs to remain stable to avoid overheating and resource waste.

Suan Teck Kin suggested Vietnam boost public investment to support growth and to cushion declines from export and manufacturing activities.

He noted that the country faces a significant infrastructure gap, while capital formation expenditure accounts for only 30% of GDP, much lower than China’s 41%.

The Government is advised to increase public spending instead of being overly cautious about reducing the public debt-to-GDP ratio (currently 35%, targeted to drop to 31% by 2029).

Another solution, according to the economist, is to accelerate public investment disbursement.

He stated that it’s encouraging news that the National Assembly has recently approved an 8-billion-USD railway project connecting China and Vietnam, and fast-tracked the North-South Expressway expansion. However, he also highlighted the importance of investing in artificial intelligence (AI), data, energy and water resources to support sustainable long-term growth.

Tim Leelahaphan, senior economist for Vietnam and Thailand at Standard Chartered, said that Vietnam's economic growth will be driven by the continued expansion of business in 2025 and the following years, with foreign investment playing a crucial role in boosting growth.

The drivers of Vietnam's economic growth include the positive growth of FDI, the strong development of retail sales and industrial production, sustainable export activities, and recovering tourism.

Meanwhile, HSBC experts suggest that accelerating the dual transition - green transition and digital transformation - will help Vietnam simultaneously come closer to sustainable development and digitalisation goals, thus creating a strong growth impetus.

Moreover, focusing on infrastructure investment will be a key foundation for economic growth and attracting quality FDI into Vietnam.

The Vietnamese government is demonstrating a high determination in promoting public investment, focusing on numerous strategic infrastructure projects that connect economic centres. This will serve as an important launching pad for Vietnam to enter a new era – the era of the nation’s rise, HSBC stated.