CIEM raises growth prospects for Vietnam

Speaking on December 12, Khoi, vice president of the Central Institute for Economic Management (CIEM), said that Vietnam's GDP has grown significantly this year. CIEM had forecast 7.06 per cent GDP growth in 2024 but has recently raised it to 7.25 per cent.

"By removing obstacles, the government is aiming for double-digit growth in the long term. The core solution is improving business performance," Khoi said.

Luong Van Khoi, vice president of the Central Institute for Economic Management

In 2024, Khoi said that GDP growth improved to about 7.04 per cent, matching pre-pandemic levels. The International Monetary Fund forecast in October that Vietnam's GDP will top the region. The economy grew evenly across agriculture, forestry, and fisheries; industry and construction; and services. All important targets were achieved or exceeded the plan.

“In the past year, despite complicated and unpredictable geopolitical developments, Vietnam has been part of 16 free trade agreements (FTAs), and the global demand for Vietnamese goods is increasing,” he said.

In terms of existing problems, the vice president of CIEM highlighted the domestic economic sector has not contributed a large proportion to growth. The leading economies, including Ho Chi Minh City, Hanoi, Binh Duong, Dong Nai, and Ba Ria-Vung Tau, are gradually reducing their contribution to total GDP because they have utilised all their potential and advantages, whilst other localities are on the rise.

"Business efficiency is very important, although efficiency has nearly doubled compared to 10 years ago, but the overall efficiency has not met expectations. For example, the leather, footwear, electronics, and garment industries are key export sectors, but efficiency only reaches about 50 per cent (in terms of technical efficiency and efficiency of scale).

The reasons come from internal factors such as human resource quality and management, and external factors such as the business investment environment, shocks in the global market, and Vietnam's response.

"If the potential can be unlocked, Vietnam can achieve double-digit growth," Khoi said.

Economic drivers in 2025

For Vietnam's five major partner economies, economic growth will improve and decline alternately. A notable factor is that the US is forecast to loosen monetary policy, and other countries will follow this trend. China has also announced it will loosen monetary policy at a reasonable level.

For the Vietnamese economy, drivers for economic growth will depend on if inflation remains under control; the three economic sectors grow steadily, with the industrial and service sectors improving; people's living standards improve and the number of international tourists rises; and exports and FDI remain bright spots with positive growth rates.

In addition, infrastructure has significantly improved, especially highways to increase inter-regional connectivity, and the 500kV high-voltage line 3 has been put into operation to ensure stable energy, especially in the dry season.

The sharp increase in state budget revenue in 2024 should form the basis for increased public investment spending and implementing development support policies in 2025.

In addition, new policies will create a better institutional framework for economic development, especially new laws issued in 2023 and 2024, such as the Land Law, Law on Housing, Law on Real Estate Business, and Law on Bidding, which have already taken effect.

"Institutional development for 2025 will be more favourable thanks to the improvement of institutions that are easier to identify and observe," said Khoi.

In particular, the business sector has recovered and has seen good growth and development. At the same time, digital transformation, innovation, and the application of Industry 4.0 technology among enterprises and the political system will continue in the coming year.

“In the application of Industry 4.0 technology, AI has had a great impact. In terms of production and business, AI predicts market trends and improves customer experience, enhances performance, and optimises supply chains. AI is expected to contribute up to $15.7 trillion to global GDP by 2030.

"Countries must catch up with AI trends and anticipate the increasing role of AI in consumer decisions. Therefore, using AI is one of the urgent requirements that we must implement. Once AI is applied to improve business performance, there is no doubt about double-digit growth rates,” Khoi emphasised.

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