Bright prospects for Vietnam’s economy in 2024

In 2023, amidst challenging global and domestic conditions, Vietnam has demonstrated resilience and exerted efforts to overcome obstacles, striving to revive and boost economic growth. With the results achieved, the investor community, businesses, and the general public have higher expectations for the economic recovery in 2024.

Inside Vinfast's manufacturing plant. Photo: Pham Hung/The Hanoi Times

Back on recovery trend 

In 2023, despite not achieving the set targets, Vietnam's GDP growth reached 5.05%, placing it among the economies with high growth rates globally. The GDP growth in the subsequent quarters was higher than the previous ones. The macroeconomy remained stable, inflation was controlled, and lower than the set target, and major balances were ensured. Public debt, government debt, foreign debt, and the state budget deficit were all under control. Despite difficulties, the budget revenues exceeded projections.

The year 2023 also witnessed significant diplomatic successes for Vietnam, as it elevated relations with major powers like the US, Japan, and China.

High-level visits, especially those by the General Secretary and President of China, Xi Jinping, and US President Joe Biden, strengthened strategic partnerships and raised Vietnam's image, influence, reputation, and status to new heights.

This enhanced positioning contributed to the growth of Vietnam's national brand value, which reached US$431 billion, ranking 32nd among the world's strongest national brands.

Global rating agencies like Moody’s and Fitch Ratings have recognized and praised Vietnam's economic performance and prospects. In the WIPO global innovation index, Vietnam has been climbing steadily, from 59th place in 2016 to 46th in 2023. In December 2023, Fitch Ratings upgraded Vietnam's credit rating from BB to BB, with a "Stable" outlook.

Vietnam became a shining point in the global economy and a focal point for international investment, especially in high-tech fields such as Industry 4.0, semiconductor chips, AI, and hydrogen. Despite global investment challenges, Vietnam attracted over US$36.6 billion in foreign direct investment in 2023, with a record disbursement of US$23.18 billion.

Party Chief Nguyen Phu Trong and US President Joe Biden during the latter's visit to Vietnam in September this year. Photo: Nhat Bac

Vietnam’s economic success story continues

At this point, many businesses have planned for growth in the coming year, despite ongoing challenges. Positive market changes have been observed, and even though global economic conditions have impacted operations, some companies have shown significant growth by the end of Q3 2023.

For instance, Rang Dong Light Source and Vacuum Flask Joint Stock Company achieved a revenue of VND5 trillion ($204 million) and a profit after tax of VND390 billion ($16 million) by the end of Q3 2023. This marked a 20% and 41% increase, respectively, compared to the same period last year, achieving 80% of the revenue target and surpassing the profit target. The company attributed this profit increase to maximizing resources, applying digital transformation, and automating production processes. Additionally, the company benefited from corporate income tax incentives since the beginning of 2023 after receiving a certificate as a scientific and technological enterprise.

Another strategy for growth involves accessing foreign markets to expand growth opportunities, as seen in the case of the Hanoi Plastics Joint Stock Company. The company is concentrating on exporting its flooring and household plastic products.  It has already received orders from a major Canadian supermarket for the year 2024.

According to Ngo Van Thu, the CEO of Hanoi Plastics, the company aims to break out of its comfort zone, not only supplying traditional domestic customers but also expanding to new customers and markets abroad, thereby achieving greater autonomy in business plans.

Do Tien Dung, Chairman of the Board of Directors of Haxaco (Hanoi Automotive Service Joint Stock Company), views the current challenging situation as an opportunity for companies to reassess, adjust, and overcome limit ations to gain momentum when the market recovers. Haxaco is intensifying training efforts, enhancing the quality of human resources and systems, and preparing for long-term plans as the Vietnamese automotive market still holds significant long-term growth potential.

For the Textile, Garment, and Investment Corporation, business prospects are expected to be more favorable in the coming year. The company has already started receiving orders for Q1/2024.

Experts believe that companies have gone through a lengthy restructuring period, labor adjustments, cost reductions, and increased competitiveness. Therefore, the overall health of the manufacturing sector is gradually improving and is expected to be even better in 2024. The recovery of certain markets, especially after destocking, is anticipated to bring new orders to many companies in Q1 next year.

The economic outlook for Vietnam in 2024 is much more optimistic compared to 2023. According to the International Monetary Fund (IMF), the global average economic growth in 2024 is projected to be around 2.9%, while Vietnam's growth is estimated to be around 5.8%, double the world average, placing it among the top 20 economies with the highest growth rates in the world. Additionally, the Asian Development Bank forecasts Vietnam's GDP growth in 2024 at 6%. Bloomberg's latest survey suggests that Vietnam's economy may grow by 6.3% in Q1/2024 and 6.5% in Q2/2024. GDP growth is predicted to be around 6% in 2024 and 6.4% in 2025.

Economic expert Han Teng Chua from DBS Bank acknowledges, "Vietnam's economy is firmly on a recovering path."

Institutional reform, and facilitating Government as key factors for growth

Prime Minister Pham Minh Chinh emphasizes that 2024 is a breakthrough year, holding special significance for the successful implementation of the 5-year Plan for 2021-2025.

The government has set the theme of "Firm responsibility, proactive timeliness, accelerated innovation, sustainable efficiency" in the spirit of the "Year of Determination" and outlined 10 key tasks and solutions. The government is determined to overcome difficulties, tackle all challenges in various sectors, protect officials who dare to think and act for the common good, ensure that the people and businesses enjoy the benefits, and strive for the best results in 2024.

Among the 10 groups of tasks and solutions, the Prime Minister emphasizes the priority of promoting growth, maintaining macroeconomic stability, controlling inflation, and ensuring major balances in the economy. The focus is on resolutely and effectively implementing strategic breakthroughs, restructuring the economy in conjunction with innovation in the growth model.

To achieve the goals of 2024, including a GDP growth of 6-6.5%, the government emphasizes the need to concentrate on boosting growth. The top priority in 2024 is to focus on promoting growth drivers, including exports, consumption, and especially investment (public, private, and foreign investment). The government also aims to seize every opportunity to stimulate new growth drivers such as the digital economy, green economy, circular economy, emerging industries, and sectors, and to promote innovation, science, and technology.

Continued innovation and reform, economic restructuring, and more rational resource allocation are deemed essential. The government aims to efficiently implement resolutions on regional development, focusing on improving regional planning and industry planning at both the provincial and national levels to create momentum for investment attraction and socio-economic development.

To support the business community in achieving growth targets, experts suggest that government policies such as debt deferral, land rent reduction, VAT cut, and lower interest rates are timely measures for businesses.

"To promote Vietnam's economic growth in 2024 and beyond, it is necessary to open up the financial market, and capital market, especially to accelerate the disbursement of public investment. Implement the economic restructuring plan, coupled with digital transformation to actively and sustainably develop the digital economy. In 2024, the government needs to focus on perfecting the system, and related policies, with the central focus on digitizing state management activities, digital economy, and society to attract and encourage economic entities to participate in these areas," notes economist Tran Dinh Thien.