It forecast Vietnam’s gross domestic product (GDP) growth will reach 6.7% this year and 6.5% next year, driven by a strong manufacturing sector and a rapid recovery in domestic demand. A key source of growth for Vietnam next year will be its manufacturing exports.

Consumption growth should be broadly supported by stronger wage growth in 2025, mostly from the consequent feedthrough from FDI. In 2022, FDI sector workers earned around 14% more than non-state sector workers.

Tourism will be another tailwind, too, though it will likely add less to growth than it did this year. Tourism receipts in 2023 were 6.6% of nominal GDP.

Within Asia, Vietnam has been the second-largest beneficiary of tourism this year behind Japan. Additional spillovers from tourism-related income will help to drive domestic spending.

While the boost from global chip demand will moderate next year, as strong base effects are working against chip production and demand is set to slow in the near-term, it should still be positive.

Earlier stockpiling in the aftermath of supply chain disruptions has contributed to excess inventory, and demand is soft in the automotive, mobile, and computer clusters.

Indeed, our proprietary Asia Chip Export Index shows that across Asia, growth in chip export volumes slowed from the start of the year, Oxford Economics said, noting in Vietnam, this was reflected by contracting output in electronic component production in annual terms since mid-2024.

Other electronicrelated sub-components that make up electronic exports are also not overperforming

Oxford Economics said 2025 should have sufficient tailwinds for manufacturing to remain solid. Artificial intelligence-related tailwinds, such as more spending on data centres globally, should present a structural boost.

Other large exporting sectors are machinery and electrical appliances, textiles, and agriculture. A boost should come from the front-loading of export orders next year in anticipation of tariffs, which may be sufficient to offset soft electronics demand in the near term.

Greater US fiscal stimulus also presents an upside risk for 2025, given that the US is Vietnam's largest export destination, it said.

According to Oxford Economics, growth in FDI inflows will continue to be maintained, although at a slower pace. It expects investment growth in 2025 to reach 7.2%, higher than the 6.9% forecast for this year.

Oxford Economics' projection is similar to that of other international financial institutions. The Asian Development Bank (ADB) previously raised its forecast for Vietnam to 6.4% this year and 6.6% in 2025. HSBC also believed that Vietnam's GDP growth could reach 7% in 2024 and 6.5% in 2025, the highest in ASEAN-6. Standard Chartered forecast that Vietnam will grow strongly at 6.7% in 2025. Meanwhile, UOB predicted that Vietnam's growth rate in 2025 will be 6.6%, the highest in ASEAN-6.