Targets improved upon for economy

The government last week noted that the domestic economy’s growth is strongly recovering each quarter. In 2024, after growing 5.98 per cent in Q1, the economy bounced back to 7.25 per cent in Q2, 7.43 per cent in Q3, and 7.55 per cent in Q4.

The rate for the whole year was 7.09 per cent, with an economic scale of about $476.3 billion.

Prime Minister Pham Minh Chinh stated that with such a positive achievement, Vietnam continues to be a bright spot in growth worldwide and is among the countries with high growth rates in the region and the wider world. The economic structure continues to shift positively, with the proportion of the agricultural sector being only about 11.86 per cent.

“Growth quality has improved, with labour productivity growth estimated at 5.88 per cent, exceeding the set target. The Index of Economic Freedom has increased by 13 places, to 59 out of 176 countries and territories,” PM Chinh stated.

Vietnam has become one of 20 economies with the largest trade scale in the world, with 17 free trade agreements. It has also become an important link in regional and global supply chains. The country is also strongly shifting to a digital and green economy.

Especially, it has established itself as an important base for the global semiconductor industrial chain, attracting many big tech groups. Vietnam’s national value in 2024 hit $507 billion, ranking 32nd out of 193 countries and territories in the world, up one rank against 2023, the PM added.

Targeting higher growth

Despite the 2024 growth, it has been deemed challenging to reach an average growth rate of 6.5-7 per cent for the 2021-2025 period, and higher growth of 7.5-8.5 per cent annually for 2026-2030.

One per cent of growth, based on 2024’s $476.3 billion scale, will create $4.76 billion, meaning 360,000-400,000 jobs for the domestic economy.

The government’s foremost priority in 2025 is to boost economic growth further, with the National Assembly in late November fixing the growth rate for 2025 at 6.5-7 per cent, with efforts to be made to reach 7-7.5 per cent.

However, within just the latter half of December, PM Chinh released two statements on boosting economic growth. The first ordered a growth rate of over 8 per cent, but the second underscored double-digit growth, which must be hit within at least over the next 20 years, so that Vietnam will become a developed high-income country.

The World Bank’s Vietnam 2045 report released in November stated that Vietnam should act now, and its remarkable development success to date was not a coincidence.

“It was hard-earned through progressive structural reforms and investment in human capital and infrastructure,” the report said. “However, reform implementation and investment has stalled in recent years. Vietnam needs to reinvigorate reforms to germinate the policy seeds for sustained success tomorrow. Pursuing a comprehensive approach that combines the key policy reforms could unlock productivity growth, attract private sector investment, and help lift Vietnam to high-income status by 2045.”

According to the International Monetary Fund (IMF), Vietnam is ranked 12th in a list of Asia’s 15 largest economies, with a projected GDP scale of $506 billion.

“Despite such large shocks, the Vietnamese economy has shown strong resilience. A rapid economic recovery since late 2023 gained strong momentum in 2024, thanks to a rebound in exports, resilient foreign investment, and supportive macroeconomic policies,” Paulo Medas, division chief and mission chief for Vietnam at the IMF told VIR.

“The Vietnamese government set ambitious development goals for the next 20 years, including reaching upper-middle-income status by 2035 and high-income status by 2045, the centenary of national independence,” Medas said. “The latter requires sustaining annual economic growth at similar levels as in the past two decades, around 6-7 per cent per year.”

He suggested that improving business environment and economic governance can further increase Vietnam’s attractiveness for both foreign and domestic investors and firms. “It will be important to improve administrative and legal processes, including by further progress in making laws and administrative processes clearer, simpler, and more transparent to provide greater legal certainty, reducing scope for excessive discretion by public officials, and limiting red tape,” Medas added.

The Vietnamese government expects that the economy’s GDP will increase to about $500 billion in 2025, which will be 1.45 times higher than in 2020, ranking 33rd globally and fourth in ASEAN. Per capita will increase by 31.7 per cent to from $3,720 in 2021 to about $4,900 this year.

Key impetuses

As the government envisions GDP growing higher towards 2030, it determines that the key driving force will be boosting disbursement of public investment, attracting more overseas funding, especially high-tech investments with high added values, and expanding exports, as well as increasing domestic consumption.

Total public investment for 2025 has been handed a target of $12.5 billion. This money will be used for constructing a series of key infrastructure projects, including the $16 billion Long Thanh International Airport and the North-South High-speed Railway, costing $67.34 billion, with construction set to commence in 2027.

“Public investment will help boost economic growth and attract more investment,” PM Chinh stressed.

He added that Vietnam continues to be a safe and attractive destination of international businesses, partners, and investors.

Named in the list of developing countries that woo the most foreign direct investment (FDI), Vietnam attracted $38.23 billion worth of registered FDI in 2024, of which $25.35 billion was disbursed, up 9.4 per cent on-year.

“With significant inflows into high-tech manufacturing, real estate, and energy, the country is poised to play a pivotal role in global supply chains. Strategic partnerships with leading investors, particularly from Singapore, South Korea, and China, further highlight Vietnam’s importance in the Asia-Pacific region,” commented Vietnam Briefing under Dezan Shira & Associates.

“Looking ahead, Vietnam’s emphasis on infrastructure development, regulatory reforms, and regional integration through trade agreements is expected to sustain its upward trajectory,” it added.

In addition, to spur on growth, the Vietnamese government has also determined that in 2025, exports will must be expanded. In 2024, total trade turnover is estimated to have hit a record of $786.29 billion, up 15.4 per cent on-year, and three times higher than the plan earlier assigned.

This included $405.53 billion worth of exports, up 14.3 per cent, and $380.76 billion for imports, up 16.7 per cent. The total trade surplus came in at $24.77 billion.

Meanwhile the industry and trade sector has set a new ambitious export target of $454.23 billion in 2025, up 12 cent on-year.

In mid-December, Standard Chartered Bank released its latest macroeconomic updates for Vietnam, expecting strong GDP growth of 6.7 per cent in 2025, with growth easing from 7.5 per cent on-year in H1 to 6.1 per cent in H2.

According to its economists, Vietnam’s economic growth momentum has been relatively strong, with improvement across multiple sectors including imports and exports, retail sales, real-estate, tourism, construction, and manufacturing. Trade recovery, increased business activity, foreign investment to be sources of growth in 2025 and beyond.