Summary:

I

Vietnam's Strong Economic Performance in 2024 Surpasses Expectations with 7.09% Growth.

Vietnam’s economic indicators for 2024 paint a rosy picture, as the inflow of foreign investments and the transformation of global supply chains continue to benefit the nationThe expansion of factories established by multinational corporations in Vietnam is a primary driver behind a surge in exports, which in turn has contributed to the remarkable economic growth.

According to data released on Monday by the General Statistics Office of Vietnam, the economy experienced a growth rate of 7.09% in 2024. This outperforms the nation’s initial prediction made at the beginning of the year, which stood at 6.5%, as well as the 5.05% growth rate from 2023.

With electronic products, smartphones, and garments leading the charge, Vietnam's export of goods rose by 14.3%, reaching approximately 405.5 billion USD, making it a critical factor driving the nation's economic expansion.

The government’s policy focusing on equitable income distribution has allowed Vietnam's population of over 90 million to benefit from economic growth, fostering optimistic expectations for future income

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This optimism has contributed to a robust domestic consumption environment that has harmoniously supported the booming export sector.

In 2024, Vietnam's retail sales of goods and services, at current prices, are estimated to reach 6,391 trillion Vietnamese Dong (about 251.7 billion USD), which constitutes approximately 51% of the GDP and marks a 9% increase compared to the previous yearMeanwhile, fixed asset investments reached 3,692 trillion Vietnamese Dong (around 146 billion USD), reflecting a growth rate of 7.5%. The growth of consumption has outpaced that of fixed asset investments, with the scale of consumption being 1.72 times larger than that of fixed asset investments.

IIAspirations for 8% Growth by 2025 as Vietnam’s Prime Minister Targets Higher Economic Ambitions, ADB Predicts 6.6% GDP Growth.

Looking forward, Vietnam harbors ambitions for even more significant growth, with Prime Minister Pham Minh Chinh recently stating hopes for an 8% economic growth by 2025.

This Southeast Asian nation is poised to benefit from the ongoing changes within supply chains and geopolitical tensions

Vietnam has emerged as a favored destination for companies looking to relocate their manufacturing from neighboring countries, aiming to dodge potential tariffs and mitigate risks of supply chain disruptionsThe influx of foreign direct investment in recent years has played a pivotal role in bolstering an export-oriented manufacturing sector.

The robust performance of Vietnam in 2024 indicates that the nation could be overcoming the challenges faced in 2023, where a sluggish global economy combined with uncertainties in the domestic political landscape had hampered economic growth.

In December 2024, the Asian Development Bank revised its growth forecasts for Vietnam in 2025, raising its prediction from 6.2% in September to 6.6%, citing anticipated strong rebounds in manufacturing exports and trade.

III

Tariffs Pose Significant Risks to Vietnam's Economic Growth.

As one of Vietnam’s key trading partners, the United States is significant to its economic landscapeIn 2024, Vietnam enjoyed a trade surplus with the U.S., ranking third after China and MexicoTrade with Mexico is closely tied to re-exports or processed goods sent to the U.SThe risks associated with tariffs arising from the pursuit of bilateral trade balance could pose substantial threats to Vietnam's exports, thereby impacting its economic growth.

In December 2024, economists from Oxford Economics, led by Sheana Yue, predicted that Vietnam would be the sole Southeast Asian economy to experience higher tariffs introduced by the governmentYue highlighted the potential motivations behind these protective measures, particularly targeting industries like manufacturing, electronics, and metals, which serve as critical pillars of Vietnam's economy.