UOB remains positive on Vietnam's economic growth prospects

This is the basis for the growth outlook for the whole year 2024 that Singapore-based United Overseas Bank (UOB) continues to maintain its economic growth forecast for Vietnam at 6.0%, with achievable growth target of 6 - 6.5%.

This information was shared by Suan Teck Kin, executive director of global economics and market research at United Overseas Bank (UOB), at the announcement of UOB's 2024 Business Outlook Study held on July 16 in Ho Chi Minh City.

Vietnam's economic growth beyond expectations

According to Suan Teck Kin, growth drivers come from the recovery of the electronics industry’s demand, stable growth in China and the region as well as the ability of major central banks to loosen the monetary policy which will support Vietnam's prospects.

Analyzing the positive results in the first half of 2024 in Vietnam, UOB experts said that Vietnam's real GDP increased by 6.93% in the second quarter of 2024, continuing the increase from 5 .87% in the first quarter.

Overall, the Vietnamese economy grew by 6.42% in the first half of 2024, far exceeding the 3.84% in the first half of 2023.

Regarding foreign investment attraction, the UOB expert commented that foreign investors largely view Vietnam's prospects positively in the coming years as it overcome changes in domestic politics in early 2024.

Registered foreign direct investment (FDI) surged by 13.1% to US$15.2 billion in the first half of 2024, of which disbursed FDI inflows into Vietnam reached US$10.8 billion.

FDI data shows that businesses continue to consider Vietnam an important investment destination in the medium and long term amid the global economy's ongoing supply chain restructuring.

On the other hand, an increase in both realized and registered FDI inflows will further intensify domestic activities in the coming quarters, including construction and employment.

This affirms the trust and commitment of foreign businesses to Vietnam in the current wave of deglobalization, risk reduction and supply chain transformation.

Besides the advantages, UOB expert also gave some recommendations related to challenges and trends that need to be monitored to maintain strong growth momentum in the second half of 2024.

Accordingly, in addition to the risks that are still present and could have a significant impact if the situation worsens, including the conflict between Russia and Ukraine as well as in the Middle East between Israel and Hamas, which could disrupt the global trade market in terms of transportation, energy, and commodities.

In line with this, inflationary pressures still exist, especially in food and energy prices, he emphasized.

Vietnamese businesses optimistic about current business environment

UOB's 2024 Business Outlook Study surveyed more than 4,000 businesses (small and medium enterprises (SMEs) and large enterprises in seven key markets across ASEAN and China, including 525 businesses in Vietnam.

The results indicated that most Vietnamese businesses are still optimistic about the current business environment.

Nearly 90% of Vietnamese businesses expressed their interest in expanding their business abroad, with ASEAN being the top market that they target to expand their business in the next three years.

Regarding future prospects, nearly 90% of businesses in Vietnam expect that 2024 will have positive changes with improved business efficiency. Businesses are planning to increase adoption of digital solutions, upgrade equipment or facilities to improve productivity and diversify sales channels for growth stimulation.

Cross-border digital trade platforms are a popular means of expanding business abroad used by most interested businesses.

According to UOB study, ASEAN is the top choice and one of the key regions that Vietnamese businesses are targeting for overseas investment over the next 3 years, with 70% of businesses wanting to expand their business activities into this region, followed by China with 37%.

In ASEAN, Thailand is the most important country that Vietnamese businesses want to invest in, trailed by Singapore, Malaysia and Indonesia.

To be successful in expanding into foreign markets, local businesses are expecting financial support such as tax incentives or tax refunds (42%), funding sources or subsidies for new markets (40%).

Besides, more than 40% of Vietnamese businesses are looking for non-financial support, such as connecting with major businesses that are potential customers that their companies can provide in foreign markets.

UOB research also shows that more than 80% of Vietnamese businesses are poised to spend more on digitalization activities by 2024, with budgets increasing by 10-25%.

However, businesses also may encounter a number of challenges such as cybersecurity issues, shortages of digitally skilled employees and growing risks of data breaches.