One of the key drivers of Vietnam's GDP growth is exports.

In the current economic landscape, Vietnam has set a GDP growth target of over 8%, with an estimated economic scale exceeding $500 billion, per capita GDP around $5,000, and a consumer price index fluctuating between 4.5% and 5%. However, to reach this figure, experts emphasize the need for a thorough assessment of growth drivers and challenges.

Growth Drivers and Key Indicators

Using the production approach to calculate GDP, Vietnam's two main economic growth drivers are the industry-construction and processing-manufacturing sectors, alongside the service sector. To achieve the 8% GDP growth target, the industry-construction sector must grow by more than 9.5%, while processing-manufacturing needs to exceed 9.7%. This is a significant challenge, as the average growth over the past five years has been only 5.55 - 6.56%.

The service sector also plays a crucial role. To meet the overall growth goal, services need to expand by 8.1%, whereas the past five-year average was only 5.74%, and the ten-year average was 6.59%. This requires strong domestic consumption stimulation and increased international tourism attraction.

From a consumer perspective, domestic consumption grew 8.62% in 2024, but to achieve the 2025 target, it must increase by 12%, a 40% rise from the current level. However, real consumption growth—after adjusting for inflation—stands at around 5%, significantly lower than the 8-9% average of the past decade. Therefore, policies supporting income growth, reducing living costs, and job creation are essential to boosting consumption.

Additionally, another key GDP growth driver is exports. Vietnam aims for a $30 billion trade surplus in 2025, up from $24.8 billion in 2024. Export growth is projected at 12%, but global market fluctuations—especially U.S. tariff policies on China and other countries—could create opportunities for Vietnamese businesses while also posing risks of international trade defense measures.

Regarding investment, total social investment capital needs to rise sharply. Public investment is projected at VND 875 trillion, a 28% increase from the previous year. Private investment must reach VND 2.3 quadrillion, growing by 7.7%, while FDI inflows are expected to hit $28 billion, supplemented by $14 billion from other sources. Achieving these figures will require attractive policies, improved investment environments, and streamlined administrative reforms.

Risks for Inflation and Credit Growth

High GDP growth often comes with inflationary pressures. Looking back at 2007-2008, when credit growth surged to 51.39%, inflation jumped from 8.3% to 22.97%. Uncontrolled credit expansion can lead to asset bubbles and increased bad debt. In 2024, Vietnam's credit-to-GDP ratio stood at 138%, a concerning figure.

A sound credit policy is essential to balancing growth and inflation control.

Credit growth quotas and restrictions on high-risk industries like real estate are only two of the tools the government has put in place to manage credit. However, as SMEs mostly depend on bank loans, tighter lending might have a detrimental effect on them. Thus, to maintain growth while controlling inflation, a balanced credit strategy is required.

The Incremental Capital Output Ratio (ICOR), which calculates the amount of capital required to generate one unit of GDP, is a crucial indicator of capital efficiency. Lower capital efficiency is indicated by a greater ICOR. Vietnam's ICOR increased dramatically between 2005 and 2011, a reflection of inefficient capital utilization and several investments that failed to generate tangible value.

To enhance capital efficiency, Vietnam must improve labor productivity, adopt advanced technologies in production, and strengthen corporate governance. Institutional reforms are also vital for creating a favorable investment environment, reducing administrative costs, and fostering innovation.

Achieving 8% GDP growth is an ambitious goal, but not an impossible one—provided the right policies are in place. The key lies in balancing economic expansion with macroeconomic stability. Controlling inflation, improving credit quality, using capital efficiently, and stimulating consumption are crucial. The government must implement a comprehensive strategy, integrating fiscal policies, monetary policies, and institutional reforms to drive sustainable and stable long-term economic development.