Speaking at VIR's conference, senior financial expert Nguyen Tri Hieu, described 2024 as a year of volatility and challenges for Vietnam, with difficulties likely to persist into 2025.

“My outlook is not overly optimistic given the global context for next year, particularly in foreign trade,” he remarked. “Recent global geopolitical and economic disruptions, such as Trump’s election victory, political conflicts, tense wars, and the uncertainties surrounding his second-term policies, add to the unpredictability. I don’t believe the Trump administration will continue its monetary easing policies.”

Dr. Hieu emphasised the need for meticulous preparation, as 2025 could present formidable challenges for Vietnam's economy. He identified four key variables: exchange rate fluctuations, foreign trade trends, global geopolitical developments, and Vietnam's internal economic structure.

“Vietnam is at a critical phase of economic restructuring, laying the groundwork for a new development era. Despite the challenges, there are opportunities to attract investment from US companies, especially in the high-tech and semiconductor sectors, potentially accelerating industrial modernisation,” he added.

Trinh Ha, a financial market analyst from Exness Investment Bank, highlighted short-term exchange rate pressures stemming from interest rate cuts, inflation risks, and the dollar’s sustained strength.

“However, I believe Trump’s proposed tariff hikes on China, Mexico, and Canada could create opportunities for Vietnam. During Trump’s first term, Vietnam’s exports to the US grew by 25 per cent annually, particularly in the business-to-business (B2B) segment, following the US-China trade war. While concerns about potential US tariffs on Vietnam remain, I think it is unlikely given Trump’s favourable ties with the country,” he added.

Ha also warned that inflation, rather than trade, poses the greatest risk in 2025. “Our previous forecast of three Fed rate cuts next year faces challenges due to inflation risks linked to Trump’s policies. With the US Dollar Index (DXY) high, the VND will experience pressure, impacting the domestic stock market. The risk of the central bank raising interest rates cannot be ruled out if exchange rate pressures spiral out of control amid trade policy volatility,” he explained.

Offering a more optimistic view, Hoang Quoc Anh, investment director at GHGInvest, pointed out potential benefits for Vietnam in 2025. “Vietnam could see dual advantages as its stock market is likely to be upgraded to emerging market status and the US stock market, despite upheavals, historically grows by 5-6 per cent annually."

Regarding the newly elected President Trump’s tariff policies, Quoc Anh noted that during Trump’s first term four years ago, when the US imposed tariffs of 60-100 per cent on Chinese goods, Vietnam experienced positive impacts. At that time, exports to North America accounted for 40 per cent of Vietnam's trade.

Significantly, for the first time in 14 years, China recently pledged to ease monetary policies to support growth. “This signals a robust fiscal stimulus and interest rate cuts to stimulate economic growth. As a neighbouring country, Vietnam stands to benefit from these measures. In this context, Vietnam's economy is presented with promising opportunities stemming from both the US and China,” added Quoc Anh.

He predicted that by September 2025, Vietnam is likely to be upgraded to emerging market status, unlocking significant opportunities for foreign investment funds.

“Currently, foreign investment funds have not entered the Vietnamese market because we are still classified as a frontier market. Once upgraded, initial capital inflows into Vietnam could reach $5-6 billion, with the potential for even greater amounts in the future."

Discussing investment prospects for 2025, Barry Weisblatt David, head of research at VNDirect Securities, stated, “The National Assembly has set a 7.5 per cent GDP growth target for 2024, with 60 per cent of GDP driven by consumption, which has yet to fully recover post-pandemic. Public investment will be another critical area. VNDirect estimates GDP growth could reach 6.9 per cent, but effective public investment disbursement could push it to 8-9 per cent.”

He noted that firms like Deo Ca Traffic Infrastructure Investment and Airports Corporation of Vietnam stand to benefit from public investment initiatives.

“Our previous forecast suggested that Fed might cut interest rates three times next year. However, with rising inflation risks from Trump’s policies and the persistently high DXY index, this scenario could shift,” said David. “In the past, when the DXY dropped below 100, Vietnam's stock market saw significant gains. However, when exchange rates climbed again, the State Bank of Vietnam (SBV) had to intervene. We have yet to comment on the risk of the SBV raising interest rates if exchange rate pressures escalate beyond control due to Trump’s trade policy shifts next year."

David also stressed the significance of Vietnam's potential credit rating upgrade alongside its stock market reclassification. “Lower borrowing costs, possibly by 2 per cent, could result from an investment-grade credit rating. However, structural issues like compliance with Basel III and recent banking incidents must be addressed,” he said.

Representing NielsenIQ, a consumer behaviour analytics firm, Dang Thuy Ha, northern region director, shared the latest projections for Vietnam’s 2025 economic growth. “According to NielsenIQ, 35 per cent of surveyed respondents expect growth above 6.5 per cent, 45 per cent of responses foresee a 5.5-6.5 per cent range, and the remainder are cautious with expectations below 5.5 per cent.”

“NielsenIQ’s consumer stress metrics, including financial conditions, daily spending levels, and lifestyle comfort, indicate that rising inflation under Trump’s policies may negatively impact consumer behaviour. However, brighter prospects in exports, FDI, and public investment could stimulate consumer confidence in Vietnam next year,” added Ha.

Source: Vietnam Investment Review