Vietnam’s Economy Projects Sustained Growth

Vietnam's GDP grew by 6.82% in the first nine months of 2024, reflecting strong resilience amid unpredictable global economic and political fluctuations, as well as the impacts of severe natural disasters.

Merchandise exports are a bright spot for Vietnam’s economy, supported by the recovery in global trade growth

Positive highlights

According to the General Statistics Office (GSO), the agriculture, forestry and fishery sector grew by 3.20%, contributing 5.37% to GDP growth. The industry and construction sector increased by 8.19%, accounting for 46.22%, while the service sector rose by 6.95%, contributing 48.41%.

The total added value of the industrial sector rose by 8.34% year on year, with growth rates of 6.47% in first quarter (Q1), 8.78% in Q2, and 9.59% in Q3. The processing and manufacturing sector increased by 9.76%, contributing 2.44 percentage points to GDP growth. The electricity production and distribution sector expanded by 11.11%, adding 0.43 percentage points, while the water supply and wastewater treatment sector grew by 9.83%, contributing 0.06 percentage points. In contrast, the mining sector contracted by 7.01%, subtracting 0.22 percentage points from overall growth.

Merchandise exports are a bright spot for the economy amid improved global trade growth. Total merchandise import and export value was estimated at US$578.47 billion in the first nine months of 2024, up 16.3% year on year, including US$299.63 billion from exports, up 15.4%, and US$278.84 billion from imports, up 17.3%. The domestic economic sector continued to be a good exporter and importer, with stable growth, higher than that of the foreign-invested sector. Merchandise trade balance yielded a trade surplus of US$20.79 billion in the first nine months of 2024 (versus US$22.1 billion in the same period last year), thus motivating production and stimulating export.

In particular, the tourism industry maintained its growth momentum, driven by effective tourism promotion programs. International visitors to Vietnam reached more than 12.7 million from January to September, a year-on-year growth of 43%.

In the January-September period of 2024, Vietnam saw over 183,000 newly established and resumed companies, a 9.7% increase compared to the same period in 2023. This averages more than 20,300 companies per month. However, 163,800 companies withdrew from the market during the same timeframe, reflecting a 21.5% rise, or about 18,200 companies monthly.

According to a business trend survey for industrial processors and manufacturers in Q3 2024, 34.7% of respondents reported improved performance compared to Q2, while 42.6% indicated stability, and 22.7% faced difficulties. Looking ahead, 42.2% expect better performance in Q4 compared to Q3, 40.4% anticipate stable performance, and 17.4% foresee more challenges.

As of September 30, 2024, registered foreign direct investment (FDI) in Vietnam showed robust growth, with 1,027 new projects and increased investment totaling over US$7.64 billion. This reflects a 7.3% rise in projects and a significant 48.1% increase in investment value compared to the same period in 2023. Disbursed FDI funds grew by 8.9% year on year, reaching US$17.34 billion in the first nine months of 2024, highlighting continued investor confidence in Vietnam's investment environment.

Inflation was appropriately controlled and actively supported economic growth. The average consumer price index (CPI) climbed 3.88% in the first nine months, and is likely to reach the 4-4.5% target set by the National Assembly in 2024.

Prioritized growth boost

Given the 9-month bright economic picture spotted with associated difficulties and challenges, the Government and localities are urgently carrying out solutions to overcome the consequences of natural disasters, quickly help affected businesses and business households to resume operation and boost growth drivers.

The Prime Minister emphasized 12 groups of key solutions and five important and urgent tasks for the coming time. The 12 groups of key solutions include focusing on overcoming the consequences, preventing and combating natural disasters, stabilizing people's lives, and promoting business recovery; carefully preparing, ensuring the progress and quality of reports and projects at the 8th meeting session of the 14th National Assembly with the spirit of actively implementing assigned functions and tasks, actively and promptly handling difficulties and generating high consensus; further prioritizing enhanced growth associated with maintaining macroeconomic stability, controlling inflation, and ensuring major economic balances; and striving to achieve over 7% of growth in 2024.

Other groups of solutions include creating breakthroughs in public investment capital disbursement; strongly promoting three National Target Programs; striving to disburse at least 95% of investment capital; speeding up the progress of important national projects and expressways; preparing investment in important railway projects; disbursing public investment capital; diversifying markets, products, and supply chains for export; increasing total demand for consumption; completing institutions, laws, administrative procedures and national digital transformation; removing difficulties and obstacles, especially in terms of laws and procedures, to speed up the progress of social housing projects and social housing credit packages.

In particular, the country needs to thoroughly handle outstanding and long-standing issues; pay attention to the mandatory transfer of weak banks; and urgently remove difficulties and obstacles for projects and land in inspection, examination and judgment conclusions.

Regarding five important and urgent tasks, according to the Prime Minister, priority is given to boosting growth, renewing traditional growth drivers (investment, consumption and export) and strongly promoting new growth drivers (green transformation, digital transformation, new industries and fields and high technology); actively, flexibly, promptly and effectively managing monetary policy; coordinating synchronously, harmoniously and closely with a reasonable, focused expansionary fiscal policy and other macro policies; and not allowing shortages of electricity, gasoline, water, medical supplies, essential goods or input materials for production.

In addition, there is a need for coordinating with the National Assembly’s Standing Committee and its other committees to carefully prepare laws and resolutions on strengthening decentralization of power, reducing administrative procedures and enabling development creation to submit to the National Assembly; supporting housing repairs for households affected by Typhoon Yagi; speeding up the VND140 trillion credit package for social housing and worker housing; effectively and substantially implementing movements to eliminate temporary and dilapidated houses nationwide; boosting public investment capital disbursement; fostering business activities; improving employment and livelihoods, improve people's material and spiritual life; further preventing, controlling and overcoming the consequences of natural disasters.

By Quynh Chi, Vietnam Business Forum