Three driving forces to help Vietnam’s GDP growth top ASEAN in the next two years:

INVESTMENT, EXPORT OF ELECTRONICS AND DOMESTIC CONSUMPTION

Mr. Peter Redhead, Research Director of HSC shared about Vietnam’s economic trends and forecasts

Mr. Peter Redhead, Research Director of Ho Chi Minh City Securities Joint Stock Company (HSC) shared at the CEO Club event taking place on the evening of March 20, Vietnam’s GDP will likely recover to 6.1% this year and increased to 6.7% in the next year thanks to three factors: the positive return of investment, exports, especially electronics exports, and domestic spending.

If it can reach 6.1%, it means Vietnam’s economic growth will lead the ASEAN region, according to HSC forecasts. This securities company forecasts that growth will be over 6% in the first half of the year, then gradually stabilize in the second half of the year.

“In 2023, although GDP growth cannot be achieved as targeted, overall, Vietnam is still a bright spot in the gray picture of the global economy,” said Ms. Dang Minh Phuong, president of CEO Club review “Looking ahead, Vietnam has many reasons to be optimistic about FDI investment and exports. At the same time, the government’s economic diplomacy policies with many major economies have also opened up opportunities for many fields, notably the semiconductor industry,” Ms. Minh Phuong added.

Opportunities are also becoming clearer for Vietnam this year: supportive macro policies, Vietnam has many motivations to promote consumption because the country’s public debt/GDP is among the lowest in ASEAN, public investment in National highways show progress. “Infrastructure will extend the arms of FDI enterprises in Vietnam,” Mr. Peter emphasized.

Flexible monetary and fiscal policies will help stabilize the real estate market as well as stimulate economic growth, according to Mr. Peter. In addition, domestic consumption, the driving force of Vietnam’s economic growth last year, is expected to continue to play an important role in the country’s GDP thanks to a record low interest rate environment and value-added tax reduction policy increase (VAT).

Vietnam’s economy recovered from the fourth quarter of 2023 thanks to export growth of 7.9% over the same period last year, marking the end of a series of consecutive declines in the previous four quarters. “Vietnam’s export production is following the model of flying swallows,” Mr. Peter commented. The flying geese model refers to developing countries gradually catching up with advanced countries.

With 13 trade agreements signed since 1993 and the latest being RCEP in 2022, Vietnam has continuously expanded its export market. The bilateral and multilateral trade agreements Vietnam recently signed have helped the country diversify risks and better cope with external fluctuations.

However, businesses will also face challenges from electricity shortages – which can reduce the recovery momentum of the manufacturing industry and negatively affect FDI investment decisions. Besides, there is a decline in the domestic currency. If the Vietnamese Dong continues to decline, this will be the third consecutive year of decline. Besides, a risk that should also be paid attention to, even though there are positive signs of recovery, is the bond market, according to HSC.

Sharing about the long-term economic prospects of Vietnam’s economy, HSC representatives see that population and urbanization will be the main keys to Vietnam’s success in the long term. This Southeast Asian country is going through a period of “golden population structure” (the ratio of people of working age is twice that of dependents), which is forecast to last until 2035. Young population and the urbanization process Urbanization is creating significant development opportunities for many countries. While the young workforce brings energy and creativity, urbanization creates a favorable environment for business, technology and trade.

“Golden population and urbanization are two important topics in Vietnam, which have shown effectiveness in other countries in Asia. If Vietnam catches up, it will bring opportunities,” Mr. Peter shared.

Vietnam aims to become a high-income economy by 2045. Since 2020, Vietnam’s GDP per capita has surpassed the Philippines and is expected to surpass Indonesia in 2027.

CEO Club