An IMF team, led by Head of the IMF's Article IV Mission Paulo Medas, held the 2024 Article IV consultation with Viet Nam from June 12-26.

Concluding the mission, Medas said, in a challenging year in 2023, the Vietnamese economy grew 5 percent thanks to determined action by the government. A recovery began in late 2023, fueled by a rebound in exports, tourism, and appropriately expansionary fiscal and monetary policy support.

Regarding challenges for 2024, the IMF official noted that downside risks are high. Exports, a key driver for Viet Nam's economy, could weaken if global growth disappoints, global geopolitical tensions persist, or trade disputes intensify.

Monetary and fiscal policies are expected to remain supportive given sluggish domestic activity, but will also need to manage downside risks, including if inflation pressures were to increase. Policies should also continue to strengthen the health of the financial system.

"The new Law on Credit Institutions is an important step forward and should be followed by further measures to strengthen supervision and governance of financial institutions", highlighted Medas.

The revision of land and other real estate laws is welcome to address legal bottlenecks in the sector, he added.

A new wave of reforms to boost productivity growth is needed to maintain Viet Nam's high growth over the medium term amidst demographic and climate headwinds, suggested the IMF./.