VEPR Forecasts Strong GDP Growth for Việt Nam in Q4 2024

Hanoi, The Gulf Observer: The Việt Nam Institute for Economic and Policy Research (VEPR) has projected that the country’s GDP growth for the fourth quarter of 2024 will reach 7.4 percent, thereby meeting the government’s annual target of 7 percent. This optimistic forecast is part of two scenarios released by VEPR regarding Việt Nam’s economic growth, with the less favorable scenario estimating a growth rate of below 7 percent for the fourth quarter and approximately 6.84 percent for the entire year.

VEPR Deputy Director Dr. Nguyễn Quốc Việt highlighted the significant recovery of Việt Nam’s economy by the end of the third quarter, with GDP growth for the first nine months reaching an impressive 6.82 percent—1.5 times higher than the 4.4 percent recorded during the same period last year. The industrial and service sectors have been key drivers in this growth.

The surge in aggregate demand, fueled by increased trade and foreign direct investment (FDI), has also played a crucial role. Notably, the total value of goods trade reached USD 578.5 billion, reflecting a remarkable 16.3 percent increase compared to the same period last year, resulting in a trade surplus of USD 20.8 billion—an outstanding achievement during the 2020-2024 period.

In terms of public finance, state budget revenue has surpassed expectations while public spending has declined compared to 2023, providing an opportunity for the government to implement support policies, such as tax exemptions and reductions. This is particularly important given the impact of Typhoon Yagi on various industries.

Despite these positive developments, challenges remain. Phan Đức Hiếu, a member of the National Assembly’s Economic Committee, emphasized that the aftermath of Typhoon Yagi continues to affect production and business activities significantly. The government’s swift implementation of support measures is essential for fostering economic growth and achieving the annual GDP target.

VEPR experts warn that substantial risks still lie ahead, including sluggish consumer spending and inflationary pressures that may restrain investment growth. Additionally, the Purchasing Managers’ Index (PMI) fell below 50 in September, indicating a contraction in manufacturing activity, while the number of businesses exiting the market exceeds those entering.

Economist Phạm Chi Lan noted that while third-quarter achievements bolster confidence in recovery, they are largely dependent on exports. The slow development of domestic supporting industries and micro, small, and medium enterprises hampers Việt Nam’s integration into the global value chain.

In a recent report, Standard Chartered Bank upgraded its forecast for Việt Nam’s GDP growth in 2024 to 6.8 percent, up from 6.0 percent, citing stronger-than-expected growth in the third quarter. The bank’s economists attribute the economic momentum to improvements across various sectors, including trade, retail, real estate, tourism, construction, and manufacturing.

Tim Leelahaphan, Standard Chartered’s economist for Thailand and Việt Nam, stated, “While we remain cautious on Việt Nam’s economy in the near term, we also acknowledge the economy’s ability to perform better than market expectations.” He added that the government’s push for stronger economic growth could help maintain low interest rates.

Looking ahead, Standard Chartered anticipates Fed rate cuts to soften the US dollar bias, projecting an exchange rate of VND 24,500 by the end of 2024 and VND 24,300 by mid-2025.