Vietnamese economy: International perspectives highlight its global standing

Positive growth outlook

Leading international financial institutions, such as the World Bank (WB) and the Asian Development Bank (ADB), have continuously raised their forecasts for Vietnamese economic growth in 2024 and 2025.

According to ADB, the country’s Gross Domestic Product (GDP) growth is predicted to reach 6.4% in 2024 and 6.6% in 2025 thanks to a strong recovery occurring in manufacturing and trade, along with supportive fiscal measures.

Similarly, the WB also moved to raise the nation’s economic growth forecast to 6.1% in 2024 and 6.5% in 2025.

Andrea Coppola, lead country economist and program leader for Equitable Growth, Finance and Institutions in Vietnam, Laos and Cambodia of the WB, emphasised that amid the global economy facing many challenges such as inflation, geopolitical instability, and natural disasters, the Vietnamese economy in 2024 continued to affirm its position as one of the fastest growing economies in the East Asia-Pacific region.

The international community highly appreciates the Vietnamese Government's continuous efforts to improve the local business environment, which is also of great importance.

In line with this, the nation has effectively leveraged its strategic position as a "bridge" between the two major powers, China and the United States. Thanks to all these factors, the country has been able to attract substantial foreign investment inflows.

Bright spot in investment and technology attraction

In 2024, Vietnam continued to represent an attractive destination for international investors. According to the General Statistics Office (GSO), foreign direct investment (FDI) disbursement in the nation during the initial 11 months of last year reached US$21.68 billion, an increase of 7.1% compared to the same period the previous year. This marks the third consecutive year that FDI inflows have exceeded the US$20 billion threshold. Sectors such as renewable energy, real estate, and high technology remain the top priorities for investors.

In December, Vietnam-briefing.com, a platform by Dezan Shira & Associates, highlighted that in the technology sector, a strategic agreement with NVIDIA to develop artificial intelligence (AI) has solidified the country’s position within the global supply chain. According to Statista, Vietnam's AI market is projected to reach US$753.4 million in 2024, with a compound annual growth rate (CAGR) of 28.36% from 2024 to 2030. This demonstrates the country’s ability to maintain pace with global technological transformation, with this being driven by foreign investment.

Key factors contributing to Vietnamese technological growth include its young, dynamic workforce coupled with competitive costs. Indeed, Vietnam ranks third in Southeast Asia for the number of investment deals and total startup funding.

Over recent years, many domestic "unicorn" technology companies and startups have achieved significant success in the field of AI.

An article on Vietnam-briefing.com stressed that NVIDIA's strategic investment in the Vietnamese market marks a transformative step in the country's journey to become a future AI innovation hub in Southeast Asia.

The establishment of two AI centers by NVIDIA in Vietnam, along with partnerships with domestic companies such as VinBrain and FPT Corporation, serves to demonstrate the nation’s increasingly prominent position as part of the global AI ecosystem.

Long-term vision

In November, 2024, the WB published a report titled "Vietnam 2045: Enhancing Trade Competitiveness in a Changing World – The Path to a High-Income Future", which outlined a roadmap to help Vietnam to strengthen its position in the global value chain and achieve its goal of becoming a high-income nation by 2045.

According to the WB, over the past 40 years, global integration has been the primary driver behind successful Vietnamese development, creating one of the longest and fastest periods of economic growth in modern history.

Currently, the nation is among the most open economies in the world, with approximately 50% of its GDP and employment directly or indirectly tied to exports.

Building on its existing successes, the nation has set an ambitious goal of becoming a modern, high-income economy by 2045. This requires sustaining an annual per capita GDP growth rate of approximately 6% over the next two decades.

Despite plenty of positive prospects, the country continues to face several challenges, including risks from climate change, natural disasters, and slowing growth in major trading partners.

The WB therefore recommends that the nation move to invest heavily in human capital, infrastructure, and structural reforms, while also fully leveraging free trade agreements in a bid to expand markets and reduce trade barriers.

Similarly, Shantanu Chakraborty, country director of the ADB in Vietnam, also stressed that public investment will be the "key" to driving economic growth.

According to him, public investment not only stimulates demand and job creation, but also positively impacts dependent sectors such as construction, logistics, and transportation. This will serve as a tool in which to help Vietnam reduce its excessive reliance on the monetary policy.

The second driver is reform aimed at enhancing business convenience and ensuring that the nation maintains its competitive advantages as many other countries around the region invest in building world-class infrastructure.

Chakraborty considers these two factors as the main drivers as the nation strives to sustain its development momentum and achieve the growth targets set by the Government in the future.