According to the bank’s latest report, Vietnamese real GDP in Q4 2024 surged by 7.55% year on year, extending the momentum from a revised figure of 7.43% in Q3 2024 and far ahead of market expectations.

With the surprisingly strong performances in three straight quarters, the local economy expanded by 7.09% in 2024 from 5.1% in the previous year, beating both the consensus call of 6.7% and the official target of 6.5%. This was the best showing following the post-COVID rebound in 2022 which saw growth of 8.1%.

The report outlines that manufacturing and services were the main drivers of activities in Q4 2024, while external trade maintained its strong pace throughout most of the year.

The upswing in semiconductor sales since mid-2023 also boosted exports performance. Export activities expanded for the 10th month in 2024, registering a full year gain of 14%, and reversing the 4.6% contraction seen in 2023.

Imports rose by 16.1% in 2024 to deliver the country’s second largest trade surplus of about US$23.9 billion following the record high of US$28.4 billion in 2023. This marks the ninth consecutive year that Vietnam has registered an annual trade surplus, which will be helpful in anchoring the local currency (VND) exchange rate.

UOB experts analysed that Vietnam’s heavy dependence on international trade is reflected in the roller coaster ride of economic growth seen over the 2023 - 2024 period, where a bust in exports in 2023 caused a significant slowdown to the headline GDP.

Most notably, the boom in exports in 2024 resulted in its strongest economic performance since 2022. Specifically, the economy’s highly open nature saw export value reach about 90% of GDP in 2024, ranking as the second highest in ASEAN after Singapore’s 174% and ahead of the third-placed Malaysia’s 69%.

However, this high degree of openness means that the country is vulnerable to disruptions and frictions to international trade, especially with US President Trump’s focus on trade imbalances.

Vietnam’s National Assembly on February 19 raised the country’s 2025 growth target to “at least 8%” and looked to target “double digit” growth from 2026 to 2030, against the official forecast at 6.5% to 7%.

Economists pointed out that while a growth rate of 8% or higher is possible, exports and manufacturing will not be sufficient to drive such a performance.

They emphasised that additional capital expenditure, particularly from public investment, will be needed to stretch further, as well as to buffer against any potential downturns to trade.

The country’s capital investment ratio has stayed around 30% of GDP at least over the past decade. In contrast, China’s gross capital formation has stayed consistently above 40% in the same period. This suggests that Vietnam has been underinvesting relative to its large neighbour and there remains a case for higher public investment, particular as the Government is aiming for double-digit growth rate ahead.

Taking into account these factors, insiders remain cautiously positive for Vietnam’s outlook. They maintain their call for the nation’s full year growth forecast at 7.0% in 2025, assuming Q1’s GDP growth of 7.1%.

For 2026, they anticipated the expansion pace to step up to 7.4%, benefitting from the Government’s efficiency drive.

UOB ups Vietnam’s 2024 GDP growth forecast to 6.4%

VOV.VN - Despite the impact of Typhoon Yagi on business operations, Singapore-based United Overseas Bank (UOB) has raised its GDP growth forecast for Vietnam this year to 6.4% from its 5.9% projection about two weeks ago.