Manufacturing toys for export at Bilion Max Vietnam Export Processing Co. Ltd. in Hue city. (Photo: VNA)

According to the WB’s latest economic update report for Vietnam – Taking Stock released on March 12, a rebound in exports, powered by the global demand for technology products, supported growth in 2024. However, the momentum is expected to slow this year. The main uncertainties to the growth outlook stem from slower-than-expected global growth and trade disruptions, particularly among Vietnam’s major trading partners.

To navigate growing uncertainties, the report recommended strategies to sustain growth, including ramping up public investment, addressing financial sector vulnerabilities, strengthening energy resilience, and pushing forward with structural reforms.

Meanwhile, foreign direct investment (FDI) inflows are projected to remain steady - at about 25 billion USD disbursed - reflecting Vietnam’s continued appeal to global investors. Increased public investment and an accelerated recovery in the real estate market, thanks to faster project clearance, could support domestic demand, partially offsetting external risks.

“Vietnam is projected to maintain robust economic growth over the next two years, but it can use its fiscal space to better prepare for heightened uncertainties”, said Mariam J. Sherman, World Bank Director for Vietnam, Cambodia and Laos at a press conference.

“Growth-enhancing public investment, especially in urban, transport, and energy infrastructure will be critical, provided the authorities can both scale it up and ensure that spending is efficient,” he said.

The report highlighted Vietnam’s push toward e-mobility as a key step in creating a greener transport sector and reducing local air pollution. In 2021, transport accounted for 32.9 million tonnes of CO2-equivalent (CO2e) emissions, or 7.2% of the country’s total greenhouse gas emissions.

To achieve its 2050 net-zero target, Vietnam will need to prioritise vehicle electrification. The transition to electric vehicles (EVs) could reduce net emission by 2.2 million tonnes of CO2e by 2050, even with the current power grid mix. It could also create up to 6.5 million jobs by 2050, particularly in battery manufacturing and charging infrastructure development.

To accelerate EV adoption in the two-wheeler segment, the report recommended implementing strong safety standards, incentivising the adoption of high-performance batteries, expanding charging and battery-swapping stations, and introducing affordable financing options to offset upfront costs, among others.

To pave the way for large-scale EV adoption anticipated after 2035, Vietnam needs to prepare its power system for increased electricity demand and establish a fast-charging network over the next decade, the report said.