Growth forecasts for Vietnam from major credit institutions all show an expected GDP growth rate of 6.5 per cent, on average, this year.
The construction of the Hàng Điều road in the southern city of Vũng Tàu has not been completed due to slow disbursement of public investment in 2024. Slow and uneven public investment disbursement is a key factor affecting growth this year, according to economic experts. — VNA/VNS Photo Hoàng Nhị
Vietnam’s economy is predicted to maintain stable growth this year, but some external and internal risks may affect the development path, according to financial and economic experts.
The issues were addressed at a conference hosted by the Vietnam Institute for Economic and Policy Research (VEPR) in Hà Nội on Friday, which reviewed economic development in 2024 and the potential for growth this year.
Last year, foreign direct investment (FDI) continued to be a major contributor to economic growth, with the total registered FDI reaching US$31.4 billion by November 30, 2024, an increase of 1 per cent compared to the same period last year. The disbursed capital amounted to $21.68 billion, a 7.1 per cent increase, marking the highest level in the past five years.
According to VEPR Deputy Director Nguyễn Quốc Việt, growth forecasts for Việt Nam from major credit institutions such as the World Bank, the International Monetary Fund, the Asian Development Bank, and the ASEAN+3 Macroeconomic Research Office all showed an average expected GDP growth rate of 6.5 per cent.
Public and private investments and import-export activities will still be the growth drivers this year, he said. While the weakening of the US dollar and the Federal Reserve's interest rate cuts may benefit Việt Nam’s macro-economic system, facilitating exports to the US.
However, four major external risks may affect Vietnam’s trade with other countries this year, according to Việt.
The first risk is the global economic fluctuations and major countries' trade protectionist policies including the US, China, South Korea and Japan. Second, the geopolitical conflicts, trade and technology wars that fragment the global economy and affect countries that rely on exports, including Việt Nam.
Third, although inflation in 2025 is expected to be below 4.5 per cent, pressure from oil prices, global commodities and exchange rate fluctuations could negatively affect exports, imports and purchasing power, according to Việt. Finally, climate change and rapidly ageing populations are also growing threats to Vietnam’s long-term macro-economic stability, he said.
Nguyễn Quốc Việt, deputy director of the Vietnam Institute for Economic and Policy Research (VEPR), speaks at the conference in Hà Nội on Friday. — VNS Photo Bảo Hoa
"We recommend that the Government focus on stabilising the macro-economy while aiming for a faster and stronger recovery in growth, avoiding hasty thinking and a subjective, willful approach," Việt said. "Macro-economic policies need to be implemented carefully, with a comprehensive impact assessment and a specific roadmap should be published early to allow relevant stakeholders, especially businesses, to adapt."
In terms of the internal risks, Cấn Văn Lực, a member of the National Advisory Council on Financial and Monetary Policies, said that the slow and uneven disbursement of public investment is a key factor affecting growth this year.
Businesses are facing many challenges, including legal issues, high input costs, and a recovery in orders that is neither uniform nor sustainable. There is also a shortage of labour, low productivity, and an increasing demand for digitisation and environmental sustainability, according to Lực.
“The restructuring of State-owned enterprises and weak credit institutions is still progressing slowly. The risks associated with the corporate bond market persist and the recovery in the real estate market is slow with high prices,” he said.
Additionally, the guidelines on new laws and the development of institutions for emerging sectors, such as the digital economy and green economy, are not being issued in a timely enough manner. The ongoing apparatus streamlining efforts are also facing certain challenges.
The former director of the Central Institute for Economic Management (CIEM), Nguyễn Đình Cung, said that to achieve the GDP growth target of 6.5-7 per cent this year, decisive solutions for institutional reforms and improving the business environment are essential.
The focus should be put on solving the ‘bottlenecks’ in the business environment. Institutional reform should aim to remove unreasonable business regulations and conditions that are not in line with market mechanisms, he said.
"Decentralising and empowering local governments will create a healthy competitive environment between localities to attract investment and promote economic development," Cung said.
“Close coordination and supervision between the Government and management levels are necessary to accelerate the reform process.” — VNS
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