ADB maintains its forecast of 6% growth for Vietnamese economy

At a press conference held on April 11 to unveil the report, the ADB has maintained its earlier growth projection for the nation this year, despite lingering uncertainties in the external environment.

Nguyen Ba Hung, chief economist of the ADB in Vietnam, emphasised that subdued global demand coupled with high international interest rates have impacted Vietnamese growth.

However, a rapid switch to an accommodative monetary policy and sizeable public investment were among the key measures taken in order to sustain a growth recovery in 2023, Hung noted.

A relatively broad-based restoration in export-led manufacturing and services, as well as the stable performance of the agriculture sector are therefore expected to support the country’s recovery momentum.

Furthermore, positive inflows of foreign direct investment (FDI) and remittances, a sustained trade surplus, recoveries made in domestic consumption, and continued fiscal stimulus characterised by a substantial public investment programme can be seen as key to boosting growth this year, he stressed.

Meanwhile, Shantanu Chakraborty, ADB Country Director for Vietnam, said the Vietnamese economy is expected to grow at a solid pace this year and ahead in 2025, despite facing a challenging global environment.

“However, global geopolitical uncertainties and domestic structural fragilities could impact the outlook. Therefore, policy measures in 2024 will need to combine short-term growth support measures to strengthen domestic demand with long-term structural remedies to promote sustainable growth,” he added.

The ADB economist analyzed that softened global demand caused by a slow economic recovery and the delayed normalisation of interest rates in the US and other advanced economies, coupled with continued geopolitical tensions, are likely to further hamper the full recovery of the nation’s export-led growth in the year ahead.

As part of efforts to accelerate growth, stronger measures are required to address domestic structural fragilities, such as the heavy reliance on FDI-led manufacturing exports, weak linkages existing between manufacturing export industries and the rest of the economy, incipient capital markets, an overreliance on bank credit, and complex regulatory barriers faced by business, he noted.

The ADB official outlined that public investment remains a catalyst for Vietnamese economic growth, meaning that its effective implementation is crucial.

He pointed out that although the Government has applied various measures aimed at expediting public investment and enhancing effective execution, more systematic measures are required to improve legal and regulatory processes whilst reducing constraints on efficient delivery.