FDI firms' outlook on Việt Nam's economy in 2024

As we step into the dawn of 2024, the Year of the Dragon, Việt Nam aspires to transform like a dragon, finding itself at the threshold of significant opportunities to realise its ambitious goals. Leaders from foreign-invested companies shared their insights with Việt Nam News reporters, discussing their expectations for Việt Nam's economic growth in 2024 and outlining their key focuses for the year ahead.

Don Lam, CEO and Founding Partner, VinaCapital Group

Don Lam, CEO and Founding Partner, VinaCapital Group

After a challenging 2023 all indications are that 2024 should be a stronger year for Việt Nam’s economy, driven by a rebound in manufacturing and improvement in consumer sentiment. In addition, the plunge in interest rates throughout 2023 should help boost the real estate market after having helped support the stock market last year.

We expect Việt Nam’s GDP growth to increase to 6-6.5 per cent in 2024 from 5.1 per cent last year, driven by a recovery in exports, which fell 4 per cent in 2023, to 7 per cent growth in 2024.

The demand for “Made in Vietnam” products – especially consumer electronics – in the US and EU has already started to recover, and is likely to accelerate through 2024.

We see signs of a recovery in domestic consumption. Consumption by locals (excluding tourists) was nearly flat last year, partly because sentiment was depressed by layoffs in the manufacturing sector and issues in the real estate market, but started recovering in late 2023 as factories began rehiring workers and the Government took steps to address issues in the real estate market.

The VN-Index is expected to rise by 10-15 per cent, driven by 18 per cent earnings growth in the banking sector (which has a 37 per cent weightage in the index) and 33 per cent growth in the consumer sector (14 per cent weightage).

The index ended 2023 up 12.2 per cent after having been up as much as 24 per cent in early-September before the Việt Nam đồng (VND) depreciation prompted the State Bank of Vietnam to tighten monetary policy, sending stock prices tumbling. But the Việt Nam đồng is likely to be fairly stable this year. 

A stable USD-VND exchange rate means interest rates will also remain stable. 

Lower interest rates and volatility will support economic growth via credit creation, making loans more accessible and affordable to businesses, home buyers and consumers.

Last year, the US and Việt Nam raised their diplomatic relationship to a “Comprehensive Strategic Partnership,” further cementing Việt Nam’s position in the US “friendshoring” orbit. Việt Nam was the only country that both Joe Biden and Xi Jinping visited in 2023.

Apple announced that it will move some key engineering functions to Việt Nam for the first time, in addition to its current manufacturing/assembly activities.

The main caveat to all the positive points above is that Việt Nam needs to accelerate infrastructure development to maximise high quality FDI inflows. Its transportation and logistics infrastructure urgently needs to be upgraded, and foreign companies have concerns about Việt Nam’s ability to reliably supply electricity to industrial users.

Our open-ended funds ended 2023 on a high note, with all funds significantly outperforming their respective benchmarks on both one- and three-year bases.

We believe that Việt Nam offers attractive investment opportunities in various sectors, such as technology, financial services, consumer goods, and infrastructure, as the country benefits from the rapid digitalisation, the diversification of global value chains, and the green recovery trends.

Luigi Santoro, Country Director of Ariston Vietnam 

Luigi Santoro, Country Director of Ariston Vietnam

Following a period of internal challenges and shifts in the global economic landscape in 2023, Việt Nam's economy bounced back, with inflation staying in check and key balances safeguarded. Well-positioned in the region with robust GDP growth, Việt Nam's economy thrived in 2023, setting the stage for future advancements.

As 2024 unfolds, Việt Nam braces for the impacts of global adversities and domestic constraints. Nevertheless, signs of economic resurgence grow more pronounced. Ariston remains committed to investing in the nation, expanding our workforce and reinforcing our production facility.

Sustainable growth is now a prevalent approach to economic development globally, and Việt Nam is no exception. As a premier thermic comfort brand with over 35 years of presence in Việt Nam, we observe a rising demand for sustainable products, signalling a shift towards green consumption trends among consumers and partners. Embracing the green economy and sustainability as drivers of the future, businesses must accelerate their sustainability efforts to meet market demands.

As a frontrunner in sustainable development, we recognise that sustainability requires a long-term vision and actionable objectives. Thus, Ariston Group's 2030 Environmental, Social and Governance (ESG) roadmap outlines a detailed plan with short- and medium-term targets, guiding us towards our ultimate 2030 goals. We pledge to invest in eco-friendly water-heating solutions, minimise environmental impacts through energy-saving manufacturing practices, foster a sustainable workplace, and contribute positively to the community.

Moreover, Ariston has embraced a new mission: "The Home of Sustainable Comfort". We are committed to supporting this brand positioning by elevating Vietnamese consumers to a new level of sustainable comfort through our eco-friendly products. Sustainability epitomises our commitment to technological leadership, offering efficient products that save on utility bills, and respecting the environment while maintaining our performance excellence.

Therefore, the sustainable trend presents opportunities for us to maintain our leadership in the industry, earning the trust of millions of Vietnamese families and project partners.