ADB upbeat about Vietnam’s 2024 economic outlook, says bank country director

Chakraborty, in a recent interview granted to the Government portal, praised the government’s economic development effort, resulting in a 5.66% growth in the first quarter this year. The growth, he said, is one of the best in Asia that shows the resilience of the local economy amid domestic and global difficulties and challenges.

Global market uncertainties due to the prolonged conflicts in Ukraine and the Middle East are disrupting supply chains and reducing demand for commodities, especially for an export-driven economy like Vietnam, according to the ADB country director.

In addition, the loosening of the monetary policy may put pressure on the Vietnamese Dong (VND) in the near future.

Domestically, he said Vietnam needs to stimulate consumption supported by a prudent fiscal policy to increase the supply of cash in circulation.

Chakraborty recommended that the government ensure public investment goes in the right direction, and to do this it should further improve the legal environment and implement necessary policy reforms.

In his opinion, the main growth drivers of the local economy in the coming months will still be services, production, FDI and consumption.

Vietnam welcomed 4.6 million foreign arrivals in the first quarter of 2024, up 72% year on year and up 3.2% over the same period in 2019 dubbed the golden year of Vietnam’s tourism industry.

Export-oriented production will remain the major pillar of the economy. Despite challenges, agriculture expanded 3.8% in the first quarter thanks to increasing demand for farm products globally and the enforcement of free trade agreements Vietnam has signed with key partners.

Furthermore, FDI still plays an important role in the economy, and FDI attraction should be maintained moving forward, according to the ADB country director.

The first three months of 2024 saw Vietnam attract US$6.17 billion in FDI capital, an increase of 13.4% year on year.

Chakraborty recommended that Vietnam attract more quality FDI in infrastructure, with specific areas such as renewable energy, offshore wind power, economic zones, logistics and road connections.

With regard to local consumption, he said the country should deploy a prudent fiscal policy to boost consumption, through the spillover effect of public investment or through other tools such as extending VAT reductions, or strengthening social welfare.

Chakraborty also praised the Vietnamese Prime Minister addressing the recent 2024 Vietnam Business Forum that the country never obtains economic growth at all costs, stressing that the message is consistent with ADB’s strategic priority in Vietnam that focuses on green growth.