The Singapore-based United Overseas Bank (UOB) has raised its GDP growth forecast for Vietnam in 2025 to 7%. (Photo: VNA)

According to UOB experts, Vietnam ended 2024 on a strong note, with real GDP growth surging to 7.55% in the fourth quarter of 2024. This figure was well above median consensus view of 6.7% and the bank's forecast of 5.2%.

With the surprisingly strong performances in the past three quarters, Vietnam’s economy expanded 7.09% in 2024 from 5.1% in 2023, ahead of consensus call of 6.7% and official target of 6.5%. This is the best showing since the post-COVID rebound in 2022 (8.1%), UOB said in its recent report.

The manufacturing and services sectors continued to be the main drivers of growth, while external trade maintained its strong pace through 2024. The upswing in semiconductor sales since mid-2023 suggests that momentum is likely to continue further in the next 1-2 quarters.

The National Assembly has set a growth target of 6.5-7.0% for 2025, while Prime Minister Pham Minh Chinh recently called for at least 8% expansion, supported by faster disbursement of public investment to boost infrastructure development and attract more investment.

Based on the disciplined approach to its fiscal stance and the way public expenditure has been disbursed so far, the 8% goal seems overly ambitious but there is still merit in hitting the target, UOB experts said.

The bank expects positive momentum from domestic drivers such as production, consumer spending, and visitor arrivals to contribute to the activities, especially in the first half of 2025.

However, uncertainty on trade outlook will be a major risk for Vietnam in the second half, with its rising dependence on exports, which grew to a record high of more than 400 billion USD in 2024, just about the size of Vietnam’s nominal GDP of 450 billion USD.

On a more positive note, UOB anticipates the US government will impose additional tariffs at a more measured and paced manner, thereby reducing pressure on major exporting countries to the US, including Vietnam.