According to the Ministry of Planning and Investment, Vietnam’s gross domestic product (GDP) grew by 5.66% in Q1 2024 compared to the previous year, outpacing the growth rates of Q1 in 2020-2023. This performance is also the highest among developing countries, as reported by UOB Vietnam Bank.
The manufacturing and export sectors exhibited strong performance during this period, with exports driven by demand for electronics and phones. UOB predicts that the recovery of the semiconductor cycle, stable growth in China and Asia, and potential interest rate cuts by major central banks in the coming months will positively impact Vietnam’s economy.
FDI Inflows Continue to Rise After Hitting a Record High in 2023
Photo: “Q1 results do not reflect the full potential of Vietnam’s growth prospects for the year”.
Foreign direct investment (FDI) inflows, particularly in the manufacturing and processing sectors, reflect investors’ strong confidence in Vietnam’s business environment. This confidence is further bolstered by the ongoing reconfiguration of global supply chains as the West seeks to reduce its dependence on China.
Statistics show that FDI inflows into Vietnam reached $4.6 billion, a 6% increase compared to the same period last year, which stood at $4.3 billion. In 2023, FDI inflows into Vietnam hit a record high of $23.2 billion, surpassing the previous record of $22.4 billion in 2022. Meanwhile, registered FDI in 2023 increased by 32% to $36.6 billion, up from $27.7 billion in 2022, nearing the record high of $38 billion in 2019.
These FDI data indicate that businesses continue to view Vietnam as an important investment destination in the medium and long term, amidst the ongoing restructuring of global supply chains.
Despite achieving the highest growth rate among developing countries, Mr. Dinh Duc Quang, Executive Director of the Monetary Business Division at UOB Vietnam Bank, noted that
“the quarterly results do not reflect the full potential of Vietnam’s growth prospects for the year, as the 5.66% growth in Q1 2024 is compared to a low base in Q1 2023.”
Vietnam’s potential remains prominent, despite global challenges, due to the robust recovery in domestic demand. The vibrant retail market this year is a testament to this, with domestic enterprises expanding and foreign brands rushing to enter the market.
Vietnam is Experiencing a Strong Revival in Domestic Demand
Photo: AEON’s First Mall in the Mekong Delta Region.
In the shopping mall sector, while Thaco inaugurated the Thiso Mall in early 2024, AEON Vietnam has just started constructing its first mall in the Mekong Delta region (its eighth mall in Vietnam). KIDO Group, a newcomer, has also announced plans to open a new supermarket this year under its two brands, Van Hanh Mall and Hung Vuong Plaza.
Along with the expansion of shopping malls, brands are increasing their presence. For instance, Fahasa Bookstore has opened several new outlets in a few months, including one at Giga Mall in Thu Duc; while Pop Mart, a new entrant to Vietnam, has opened a store in Cresnt Mall in District 7, Ho Chi Minh City.
Moreover, the boom in e-commerce and exports has catalyzed surging demand. According to Amazon Global Selling, Vietnamese businesses have expanded their international reach, with a 300% increase in product sales on Amazon over the past five years. Notably, Vietnamese companies’ cross-border e-commerce capabilities are growing, with a tenfold increase in the number of businesses achieving $1 million in annual sales on Amazon over the last five years.
These developments reinforce UOB’s growth forecast for Vietnam at 6% in 2024, indicating that the optimistic Q1 results have not yet fully captured the country’s growth potential. UOB also maintains a positive outlook for the Vietnamese stock market, attributed mainly to two significant business drivers: (i) the potential for large economies to cut interest rates, stimulating consumption and supporting exports, and (ii) China’s economic recovery, being Vietnam’s top trading partner.
“In the first quarter, the total net profit of listed companies increased by 14.3% over the same period and surged by 26% compared to the previous quarter. We continue to forecast a positive profit outlook for listed companies in the coming months, especially for retailers, industrial real estate companies benefiting from the China+1 strategy, and technology firms,”
said Ms. Thieu Thi Nhat Le, CEO of UOB Asset Management Vietnam (UOBAM Vietnam).
