Vietnam Macro snapshot

2024 Highlights: Vietnam’s economy achieved impressive growth in 2024, with GDP expanding by 7.09% year-on-year (yoy), despite global challenges. Notably, Q4 GDP surged unexpectedly by 7.55%yoy, driven by the recovery of northern provinces following the aftermath of Super Typhoon Yagi. Key growth drivers included low interest rates, robust credit expansion, favorable export conditions, strong FDI disbursement, and the recovery of the private sector, particularly in real estate and construction, which overcame its most difficult period. Domestic consumption was further bolstered by tourism (especially international visitors) and the services sector.
 

The hallmark of 2024 extends beyond mere growth statistics, encompassing profound advancements in development depth. (i) The economic structure continued to shift positively, enhancing the production capacity of supporting industries and accelerating digital transformation and green technology adoption among businesses. (ii) The year marked significant progress in restructuring FDI inflows toward high-tech sectors, with numerous advanced technology projects registered (semiconductors, energy batteries, microchips, semiconductor equipment, automotive batteries, etc.). (iii) Domestic enterprises increasingly secured more jobs and contracts from FDI firms, particularly in large-scale national and regional projects.

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However, challenges remain, including public investment growth of only 3.5%yoy, the lowest net increase in new businesses in years, and persistently high non-performing loan (NPL) ratios, with internal NPLs reaching 4.55%.

 

2025 Outlook & Key Factors Shaping: The year 2025 is expected to face continued global challenges, with world economic growth projected at 3.3% by the OECD, below the historical average. Major factors include new U.S. trade and tax policies, the Federal Reserve’s interest rate cut trajectory, and escalating geopolitical tensions. The global economy is likely to become more fragmented, with trends such as re-shoring, near-shoring, and friend-shoring reshaping supply chains. Emerging technologies, particularly AI, will continue to drive growth but also intensify competition. Major powers are leveraging technological advancements while controlling exports and protecting intellectual property to curb rivals’ development.
 

Vietnam’s economy is forecast to maintain growth momentum, supported by favorable tailwinds, legal reforms addressing bottlenecks, and the operationalization of key transportation infrastructure projects. FDI inflows are expected to rise further, driven by the “China+1” strategy and investment commitments secured in 2024. The government has set an ambitious GDP growth target of 8%yoy, exceeding the National Assembly’s guidance of 6.5-7.0%, reflecting strong determination to drive economic expansion.
 

Despite these favorable factors, Vietnam must navigate challenges stemming from unpredictable global economic and political volatility and exchange rate pressures, given its high economic openness and reliance on major export markets rather than domestic consumption.
 

Long-term Prospects: Vietnam is actively promoting economic restructuring, focusing on high-tech industries, AI, and the carbon market. The collaboration agreement with Nvidia on AI and semiconductors is a critical stepping-stone to attracting deep-seated investments in these sectors in the future.