Vietnam’s economy is off to a strong start in 2024, with a growth rate of 6.4% in the first half of the year compared to the same period last year. This is an improvement from the 5% growth rate recorded in the first half of 2023, according to a World Bank report.
The manufacturing and processing industries, as well as export-related services and tourism, have been key drivers of this growth. Manufacturing and processing industries grew by 7% in the first half of 2024 compared to the same period last year, contributing a quarter of the GDP growth. Services also continued to play a significant role, accounting for over half of the GDP growth and increasing by 7.4% in the same period.
The improvement in the services sector was driven by a recovery in exports and a rebound in the hospitality industry, with international tourist arrivals reaching 8.8 million in June 2024, surpassing pre-pandemic levels. Agriculture also maintained its contribution to GDP growth at a stable 0.4 percentage points.
Dorstai Madani, World Bank Senior Economist for Vietnam, commented on the country’s positive economic outlook, stating that opportunities and risks are generally balanced.
The World Bank estimates that Vietnam’s economy will grow by 6.1% in 2024 and further accelerate to 6.5% in 2025-2026. This is an upgrade from the previous forecast of 5.5% growth for 2024 made in April this year.
“This forecast reflects the resilience of the Vietnamese economy in the face of mounting global challenges,” the report stated.
Source: World Bank
The World Bank report identified opportunities for Vietnam’s economic growth, including continuous export growth and a recovery in the real estate sector. Domestic demand is expected to pick up strongly in the second half of 2024 as investor and consumer confidence improves. Additionally, higher-than-expected global economic growth could boost Vietnam’s export recovery.
However, the report also highlighted challenges in Vietnam’s capital market, including the low proportion of institutional investors and underutilized investment potential from the Vietnam Social Security fund.
One of the main risks to economic growth is the uncertainty of global economic growth, particularly in Vietnam’s key trading partners such as the US, the EU, and China.
To address these challenges, the World Bank recommended policies to enhance market transparency and protect investors, which would help attract more foreign investment. Effective coordination between financial regulatory agencies is also crucial in achieving these goals.
“Upgrading Vietnam to emerging market status could attract billions of dollars from global investment funds into the country’s capital market. Additionally, gradually diversifying the investment portfolio of the social security fund could improve long-term returns and increase resources for economic growth through investment in the enterprise sector,” said Ketut Ariadi Kusuma, World Bank Senior Financial Sector Specialist.
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