Vietnam's economy shows bright spots amid global difficulties

The International Monetary Fund (IMF) forecast that Vietnam's economic growth will recover in the second half of 2023, reaching about 4.7% for the whole year, thanks to the rebound of exports and easing domestic policies. Inflation is expected to be controlled below the State Bank of Vietnam's 4.5% target.

According to Paulo Medas, head of the IMF's Article IV Mission, in the medium term, Vietnam can potentially regain high growth when structural reforms are effectively implemented.

The projected growth may be lower than that of 2022, but Vietnam's economy still performs well, he said.

Experts of the mission have highly valued the resilience of Vietnam's economy and called for better policy coordination to stabilise the macroeconomic situation in the current context.

Regarding Vietnam’s economic outlook, Singapore-based Maybank Research Pte Ltd said in a recent report that Vietnam’s GDP growth is likely to expand by 5% in the second quarter, and 4% in 2023 before reaching 6% in 2024.

Experts from Maybank predicted that the drop in exports will continue in the second half of 2023 due to slowing global growth, while domestic consumption is likely to decline in the next months amid a weak labour market.

Addressing the Ministerial Council Meeting (MCM) of the Organisation for Economic Co-operation and Development (OECD) in Paris in June, Secretary-General of OECD Mathias Cormann expressed his impression of Vietnam’s socio-economic development achievements in recent times.

He affirmed that the OECD will continue to accompany Vietnam on its path towards green and sustainable economic development.

In a dialogue among member nations of the United Nations in New York last month, representatives of the UN Development Program (UNDP) and countries highly valued Vietnam’s post-pandemic economic recovery and its efforts to ensure social security and responding to climate change through appropriate and timely policies.

Meanwhile, participants at the 14th Annual Meeting of the New Champions of the World Economic Forum (WEF) in Tianjin, China, acknowledged Vietnam as one of the bright spots in the region’s economic recovery, a successful model in pandemic fight, and a pioneer in growth model transformation and energy transition.

Representatives from many enterprises, impressed by the Vietnamese Government’s strong commitment and support for the business community, said Vietnam is among the most suitable choices for long-term investment and cooperation.

They spoke highly of the country’s participation in the meeting, affirming that they will come to Vietnam to continue discussions with its ministries, sectors and localities on how to realise cooperation plans.

According to the portfolio-adviser.com of the UK, Vietnam is one of the fastest growing economies in Asia.

In its article, the site said many years of consistently high GDP growth have been thanks to a highly attractive combination of political stability with sound pro-market execution from the Vietnamese Government, which has managed to slash poverty from 17% to less than 5% in the last decade.

The best-known growth driver for Vietnam is its step-change in foreign direct investment (FDI), benefiting from an increase in exports, it said, adding that Vietnam is now moving more towards manufacturing higher value products, more in electronics rather than textiles.

One of Vietnam’s most critical FDI sources is technology giant Samsung Electronics of the Republic of Korea, which employs tens of thousands of Vietnamese workers. The firm is the largest investor in the country with 50% of its handsets being produced there.

The Vietnam stock market overall now meets the size and liquidity requirements to be included, with a four-fold surge in retail participation during the past 2-3 years, driven by digital account technology, it noted.

According to the Business Times of Singapore, for decades, Vietnam has been the home of low-cost manufacturing facilities and cheap labour. However, in recent years, the government and the private sector have made a big push to bring in the best talent in an ongoing effort to become a regional technology manufacturing hub.

This has attracted the attention of numerous global tech giants, many of whom have beefed up their investments in Vietnam’s high-tech sectors.

In the first half of 2023, some big names announced plans to increase their presence in Vietnam. Chinese display manufacturer BOE Technology Group Co., Ltd. – a supplier for both Apple and Samsung – has plans to build two factories with a total investment capital of US$400 million in Vietnam. Meanwhile, US semiconductor producer Marvell Technology will establish a world-class design centre in Ho Chi Minh City.

Meanwhile, The Nation newspaper of Thailand quoted Phusit Ratanakul Sereroengrit, General Director of the Department of International Trade Promotion (DITP) under the Thai Ministry of Commerce, as saying that Thai businessmen should study the possibility of exploiting Vietnam's steadily growing retail market, which is likely to reach US$350 billion by 2025.