Việt Nam’s economy poised for 6% growth in 2024, fueled by export recovery: AMRO

Processing tra fish at Trần Hân Co Ltd. The Vietnamese economy faced significant challenges last year due to a slowdown in exports but rebounded in the second half, exceeding expectations with a growth rate of 5.1 per cent. — VNA/VNS Photo Hồng Nhung

HÀ NỘI — Việt Nam’s economy is projected to grow by 6 per cent this year, rebounding from a slowdown in 2023, driven by the expectation of export recovery, as per the January update from the ASEAN+3 Macroeconomic Research Office (AMRO).

The Vietnamese economy faced significant challenges last year due to a slowdown in exports but rebounded in the second half, exceeding expectations with a growth rate of 5.1 percent.

“We anticipate this positive momentum to continue in the coming year, projecting a growth rate of 6 percent. While this is slightly lower than the official target, we attribute it to a more moderate pace of export recovery,” said AMRO’s Chief Economist, Hoe Ee Khor, at the press briefing on Thursday.

However, Khor highlighted that the high concentration of manufacturing exports makes Việt Nam vulnerable to external shocks, as seen last year with the downturn in electronics and manufacturing goods.

To mitigate this vulnerability, Khor recommended Việt Nam diversify its export markets and move up the value chain by engaging in higher-value manufacturing exports. This strategy will help ensure resilience and sustained growth for the Vietnamese economy.

Exports were one of the three important pillars of Việt Nam’s economic growth in 2023, alongside investment and consumption. The country’s exports witnessed a double-digit reduction in the first quarter of 2023 but started to pick up since the second quarter. Notably, from July to the end of the year, export value reached more than US$30 billion each month.

With a growth forecast of 6 percent in 2024, Việt Nam ranked third in AMRO’s 2024 GDP growth forecast, trailing behind the Philippines (6.3 percent) and Cambodia (6.2 percent).

Foreign direct investment (FDI) is expected to remain a crucial driver of economic expansion. Foreign investment inflows into Việt Nam in 2023 saw a significant increase of 32 percent to nearly $36.62 billion.

“Việt Nam remains a preferred destination for foreign direct investment (FDI), especially with the China+1 strategy. Both Western multinational corporations and Chinese investors are optimistic about Vietnam as a platform for diversifying the supply chain,” Khor added.

For the region, AMRO maintained its 2024 growth forecast of 4.5 per cent for the ASEAN+3 region (ASEAN plus China, Japan and South Korea). Strong domestic demand, moderating inflation, and ongoing improvements in trade are expected to propel growth, despite uncertainties in the global outlook.

The ASEAN+3 region is forecasted to end 2023 with a full-year growth of 4.4 per cent, slightly higher than last October’s projection of 4.3 per cent. The upward revision reflects the higher growth of 5.2 per cent for China, up from last quarter’s forecast of 5.0 per cent.

AMRO is optimistic about stronger growth this year for three key reasons: the global semiconductor cycle turning around, tourism on the path to recovery, and a shift in the US from services to goods boosting retail spending on durable products, benefiting manufacturing exports.

In 2024, Khor identified several risks, including a potential spike in global commodity prices, geopolitical uncertainties, weaker-than-predicted growth in China, financial spillover from US monetary policy, and tensions between the US and China. — VNS