Experts optimistic about Vietnam’s economic outlook in 2024: British journal

The UK’s magazine The Banker has run an article highlighting optimistic opinions of experts on Vietnam’s economic outlook in 2024.

Vietnam saw gross domestic product growth of 5.1% in 2023, which is forecast to rise 6–6.5% in 2024, making Vietnam one of the strongest growth environments in Southeast Asia, the article noted.

The article quoted Khanh Vu, Deputy Managing Director at VinaCapital Fund Management as saying that the pick-up in GDP growth will be driven by rising exports and manufacturing, tourism, and a modest recovery in domestic consumption and consumer sentiment. Economic growth has also been supported by a favourable interest rate environment, he added.

Helmi Arman, economist at Citi, a US-based financial service company, said that after a freeze in early 2023, activity in the real estate sector has picked up in the second half of the year. The government is pushing through structural reforms that lay the foundation for a more sustainable recovery in the real estate sector.

The article underlined that for international investors, Vietnam’s manufacturing sector remains the most appealing, specifically in the smartphone supply chain and for consumer electronics. For domestic investors, garment, footwear, and furniture exports are gaining the most interest.

Both Vu and Kenglin Tan, senior portfolio manager, equities at Manulife Investment Management, showed optimism about Vietnam’s export prospects thanks to signs of stabilisation.

There was some trepidation that Vietnam’s decision to implement the global minimum tax rate would impact investment flows, but this has not transpired, Tan said, adding that from a foreign investor perspective, whether they invest in Vietnam or other countries in the agreement like Mexico or Thailand, they are impacted by the same policy. It can be seen from FDI flows in December 2023 after the policy was announced, that investors have not been deterred at all, she underscored.

There has also been a surge in interest in the FDI space. Vu noted that the Republic of Korea has pledged its support in investing in Vietnam, stating plans to exceed 100 billion USD in total investment by 2025. To date, the country has invested 84 billion USD into Vietnam. The focus is on manufacturing, with 62 billion USD invested into more than 4,600 projects, with large manufacturers including Samsung, LG and SK. A major project benefiting from FDI support is Long Thanh International Airport, being constructed close to Ho Chi Minh City, the expert stated, underlining that FDI support for the project has come from the US, Japan, France, Turkey, and the Netherlands.

To further extend the potential for international investment, Vietnam is opening up its stock market settlements by allowing domestic brokers to vouch for foreign investors, enabling them to purchase shares. Arman says allowing greater levels of foreign ownership could mitigate against future shocks.

In the field of tourism, the experts noted that the sector is at 70% of pre-COVID-19 levels, but domestic tourism is booming. Chinese tourists were 30% of their pre-COVID-19 levels last year.

The article cited a report from data company Vietnam Report JSC finding 66% of respondents in the tourism and hotel sector expressing confidence for 2024. Of the respondents, 93% stated the new visa rules would be a lever for the country’s tourism growth trajectory, according to the report.