Vietnam’s Economy in 2024 and Outlook for 2025

by KMC Consulting Company Limited

　In 2024, Vietnam’s government has demonstrated proactive and flexible macroeconomic policy management. Core inflation is under control, manufacturing has shown a strong recovery, and foreign investment is on the rise, setting the stage to welcome a new wave of next-generation foreign direct investment (FDI). Export turnover has reached a new historic milestone.

　The economy is expected to grow by 7.09% in 2024—an outstanding growth rate both regionally and globally—signaling a turning point and paving the way for Vietnam’s economic development phase from 2025 to 2030. This marks a new trajectory of resilience and determination, aiming for breakthrough growth and sustainable development.

Global Economic Growth in 2024: A Mixed Outlook

KMC Business and Investment in VietNam

　In 2024, the global landscape continues to be complex and unpredictable, marked by numerous risks and uncertainties. Escalating military conflicts, intensifying strategic competition among major powers, rising protectionist trade policies, increasing public debt and budget deficits, the downturn of several major economies, and partial disruptions in global supply chains have all posed challenges to global peace, stability, and economic growth.

　However, the world economy is gradually stabilizing. Global merchandise trade is recovering, inflationary pressures are easing, financial market conditions are loosening, and the labor market is showing positive signs of recovery.

　As of December 2024, most international organizations have either maintained or slightly raised their global economic growth forecasts by 0.1 to 0.3 percentage points compared to previous projections, placing the growth rate between 2.7% and 3.2%—a level comparable to that of 2023.

　The International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) both forecast global economic growth to reach 3.2% in 2024, consistent with their July and September 2024 projections. Fitch Ratings (FR) predicts a 2.8% growth rate, up by 0.1 percentage points, while the United Nations (UN) estimates global economic growth at 2.7%, an upward revision of 0.3 percentage points from its January 2024 forecast.

  • The U.S. Economy Shows Promising Signs

　U.S. economic indicators remained positive throughout 2024. In December, retail sales increased by 0.7% month-over-month, surpassing market expectations of 0.5%. Compared to the same period last year, U.S. retail sales in November rose by 3.8%. Strong domestic consumption was supported by a robust job market, characterized by historically low layoff rates and solid wage growth. These factors provide a strong foundation for an optimistic economic outlook heading into 2025.

　In terms of inflation, the Consumer Price Index (CPI) rose by 2.7% in December year-over-year. This marked an uptick from 2.6% in October and 2.5% in September.

  • China’s Economy Experiences Slow Recovery

　China continues to grapple with longstanding economic challenges, including a crisis in the real estate sector, weak domestic consumption, and mounting risks of local government debt defaults. In December, China’s retail sales grew by only 3% year-over-year—significantly slower than the 4.8% growth recorded in October. This marked the slowest retail sales growth rate since August. Additionally, Chinese government bond yields have declined sharply, with the 10-year bond yield dropping from 2.56% at the start of 2024 to just 1.74% by November. These low yields are widely interpreted as a market signal of subdued expectations for China’s economic outlook.

  • Southeast Asia’s Growth Rebounds, but Uneven Across Countries

　According to the Asian Development Bank (ADB), Southeast Asia is showing signs of economic recovery in 2024, although growth remains uneven across the region. The updated growth forecasts are as follows: Singapore is expected to grow by 3.5%, up 0.9 percentage points from the September 2024 projection; Malaysia by 5%, up 0.5 percentage points; and Thailand by 2.6%, up 0.3 percentage points. Meanwhile, the growth rates for Indonesia and the Philippines remain unchanged at 5% and 6%, respectively.

Vietnam’s Economy in 2024: On a Strong Recovery Path

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Politburo Member and Prime Minister Pham Minh Chinh and Mr. Jensen Huang, Founder and CEO of U.S.-based NVIDIA, Witness the Signing Ceremony of a Cooperation Agreement Between the Government of Vietnam and NVIDIA on Artificial Intelligence Research and Development

Photo: VNA (Vietnam News Agency)

  • Economic Growth Shows Strong Progress, Surpassing Targets

　According to the report from the General Statistics Office, Vietnam’s Gross Domestic Product (GDP) in 2024 is estimated to grow by 7.09% compared to the previous year. Among the sectors contributing to the overall economic growth, agriculture, forestry, and fishery increased by 3.27%, contributing 5.37%; industry and construction grew by 8.24%, contributing 45.17%; and services expanded by 7.38%, contributing 49.46%.

　As a result, the GDP at current prices in 2024 is estimated to reach 11,511.9 trillion VND, equivalent to 476.3 billion USD. The GDP per capita at current prices in 2024 is expected to be 114 million VND per person, equivalent to 4,700 USD, an increase of 377 USD compared to 2023.

　Vietnam’s labor productivity in 2024 at current prices is estimated to reach 221.9 million VND per worker (equivalent to 9,182 USD per worker), an increase of 726 USD compared to 2023. In real terms, labor productivity is projected to grow by 5.88%, reflecting improvements in worker skills (the proportion of workers with formal training certificates is estimated to reach 28.3% in 2024, up by 1.1 percentage points compared to 2023).

　There are three main drivers contributing to Vietnam’s GDP growth in 2024, as outlined below:

  • First, the Industrial Production Index (IIP) in 2024 is estimated to increase by 8.4% compared to the previous year (1.3% growth in 2023). Within this, the manufacturing sector is projected to grow by 9.6% (1.5% growth in 2023), contributing 8.4 percentage points to the GDP growth in 2024.
  • Second, the export turnover of goods in December 2024 reached 35.53 billion USD, a 5.3% increase compared to the previous month and a 12.8% increase compared to the same period last year. In Q4-2024, export turnover totaled 105.9 billion USD, up 11.5% compared to the same period in 2023, but down 2.5% compared to Q3-2024. For the full year 2024, total export turnover is projected to reach 405.53 billion USD, marking a 14.3% increase compared to the previous year. A notable point in the 2024 trade market is that the United States has become Vietnam’s largest export market, with an export turnover of 119.6 billion USD, while China remains Vietnam’s largest import market with 144.3 billion USD.
  • Third, foreign direct investment (FDI) remains a bright spot for the region. As of December 31, 2024, total registered foreign investment in Vietnam, including new and adjusted capital, as well as the value of foreign investors’ share purchases, reached 38.23 billion USD, a 3.0% decrease compared to the previous year. However, the actual FDI disbursement in Vietnam for 2024 is estimated to reach 25.35 billion USD, a 9.4% increase compared to 2023.

  • Business Sector Shows Signs of Recovery as the Government Pushes for Institutional and Business Environment Reforms

　According to the data from the Business Registration Department under the Ministry of Planning and Investment, by the end of 2024, over 233.4 thousand businesses have registered for new establishment or resumed operations, marking a 7.1% increase compared to the previous year. On average, nearly 19.5 thousand businesses are established or return to operation each month. The number of businesses going bankrupt or exiting the market totaled 197.9 thousand, up 14.7%, with nearly 16.5 thousand businesses exiting the market each month.

　However, according to the report from the General Statistics Office, in assessing the production and business activities of enterprises in Q4-2024 compared to Q3-2024, 77.3% of businesses reported that their production and business activities in Q4-2024 were better or stable compared to Q3-2024. Meanwhile, 22.7% of businesses noted that their activities were more challenging. Compared to Q3-2024, the percentage of businesses rating their activities as more favorable increased by 5.1%, while those reporting stable conditions rose by 0.4%, and those facing more difficulties decreased by 5.5%.

  • Flexible monetary policy management, ensuring macroeconomic stability and containing inflation

　In 2024, the State Bank of Vietnam has actively and flexibly managed monetary policy, responding promptly and effectively to support economic growth. The insurance market has gradually recovered and developed according to the set direction and objectives. The stock market has operated stably, with the market capitalization of listed shares increasing by 20.6% compared to the end of 2023. Specific figures include:

  • As of December 25, 2024, total payment means grew by 9.42% compared to the end of 2023 (compared to a 10.34% increase at the same time last year); deposits of credit institutions increased by 9.06% (compared to an 11.19% increase in the previous year); and credit growth in the economy reached 13.82% (compared to an 11.48% increase at the same time last year).
  • The central exchange rate remained largely stable in 2024, thanks to the State Bank’s appropriate exchange rate management and flexible foreign currency interventions, limiting unusual exchange rate fluctuations and helping to stabilize and meet legitimate foreign currency demand. As of December 31, 2024, the central exchange rate was 24,355 VND/USD, a 1.97% increase from the end of 2023.
  • The Consumer Price Index (CPI) for the entire year of 2024 increased by 3.63% compared to the previous year, meeting the target set by the National Assembly. The average price index of gold for the year 2024 rose by 28.64%. The average exchange rate of the US Dollar for the year 2024 increased by 4.91%.

  • Positive Developments in Investment Capital

　The total social investment capital in 2024, based on current prices, is estimated to reach 3,692.1 trillion VND, a 7.5% increase compared to 2023, exceeding the 6.6% growth of the previous year. This reflects the positive recovery in production and business activities. Foreign Direct Investment (FDI) in Vietnam in 2024 is estimated at 25.35 billion USD, up 9.4% compared to the previous year, reaching the highest level ever recorded.

  • State Budget Revenue Exceeds Targets

　According to the Ministry of Finance, by the end of 2024, total state budget revenue is expected to reach 2,037.5 trillion VND, 119.8% of the estimated target for the year, and a 16.2% increase compared to 2023. Meanwhile, total cumulative government expenditure in 2024 is estimated at 1,830.8 trillion VND, 86.4% of the annual target, with a 5.7% increase compared to the previous year.

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Steel production shows signs of recovery in 2024, with expectations for growth in 2025 to support large public investment projects

Photo: TTXVN

Challenges Facing Vietnam’s Economy

  • First, while domestic consumption has increased, it has done so only slightly, leading to weak overall demand. For the entire year of 2024, total retail sales of goods and service revenue at current prices are expected to reach 6,391.0 trillion VND, an increase of 9.0% compared to the previous year (9.4% increase in 2023). Excluding price factors, this is a 5.9% increase (6.8% in 2023). Notably, retail goods have shown the lowest growth rate, at 8.1% compared to the same period last year. It is predicted that by the end of the year, domestic consumers will continue to reduce spending in favor of increasing savings, which will further suppress demand for goods and services. 
  • Second, the USD-VND exchange rate remains unpredictable. Vietnam’s economy is heavily influenced by US consumer demand, with a strong recovery in export production. However, it remains vulnerable to the decline in US household spending and changes in trade policies aimed at preventing Chinese goods from entering through intermediary economies. Vietnam has the highest export growth to the US, led by textile, footwear, wood furniture, and machinery. With the newly elected President Donald Trump, trade policies and tariff barriers may pose future challenges for trade growth.
  • Third, raising investment capital, particularly for public investment to boost economic growth toward the target of 7 – 7.5% in 2025, will be challenging due to limited budgetary balance. This results in a small surplus for investment. Consequently, public savings from the budget surplus are very low, creating a shortage of resources for development investments. 
  • Fourth, both tariffs and non-tariff measures are being increasingly applied in international trade, making it more difficult for Vietnam’s exports to large global markets. In 2024, there were 26 anti-dumping investigations from foreign countries, the highest number in the period from 2020 to 2024, with the US accounting for nearly 50% of the total cases. 
  • Fifth, the slow increase in income compared to rising housing prices presents a significant challenge. In 2024, real estate prices continued to rise sharply, further widening the gap between property prices and the average income of the population. The rise in property prices also leads to higher rental costs, making it more difficult for households to find suitable long-term rental apartments rather than purchasing immediately. When housing needs are unmet, social stability is impacted, creating potential risks for other social issues.

Forecast for Vietnam’s Economic Growth in 2025

　The positive economic growth results in 2024 set a strong foundation and momentum for a breakthrough in 2025, preparing for a high-growth phase from 2026 to 2030 and realizing the Party’s vision for a new era of national development. At the 13th Party Central Committee meeting held from January 23-24, 2025, the Central Committee agreed on the target for 2025 to achieve at least 8% growth, with continuous double-digit growth during the 2026-2030 period. The GDP growth for 2025 is expected to exceed 8%, based on the following factors:

  • The government and ministries are urgently and decisively improving institutions and policies to eliminate growth bottlenecks and barriers: the Investment Law, the Planning Law, the Securities Law, etc. These efforts will help rejuvenate and accelerate traditional growth drivers, such as investment, consumption, and exports. Additionally, they will promote public investment, with ample room for expansion. In 2025, the government is expected to allocate 800,000 billion VND for public investment, focusing on key infrastructure projects like highways, the Long Thanh airport, the seaport system, and the North-South high-speed rail. This will create more room for increasing government borrowing and boost public investment and domestic consumption.
  • The government’s commitment to resolving difficulties and obstacles for 154 renewable energy projects is essential. This will save resources and increase the supply of green energy to support production and business, especially for large-scale foreign direct investment (FDI) projects.
  • The Politburo’s Resolution No. 57-NQ/TW, dated December 22, 2024, “On breakthroughs in the development of science, technology, innovation, and national digital transformation,” will resolve bottlenecks in science and technology, innovation, and provide breakthrough solutions to enhance investment in new and high-tech industries such as semiconductors, artificial intelligence, and cloud computing, driving Vietnam towards a green and digital economy.
  • In addition, the government’s decisive action in experimenting with new, modern development models will create breakthroughs, such as building and operating international and regional financial centers in Ho Chi Minh City and Da Nang. These will be key channels for raising large amounts of capital for projects related to green transformation, circular economy, high-tech industries in electronics, semiconductors, artificial intelligence, hydrogen, fintech, and modern infrastructure like the North-South high-speed rail and urban railways.
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Exports continue to be a bright spot of Vietnam’s economy. (Photo: Gemalink International Port, where trucks are transporting import-export goods.)

Photo: TTXVN

Some Recommendations and Solutions

  • First, the government needs to decisively remove all institutional barriers, transforming the “bottleneck of the bottleneck” into a “breakthrough of breakthroughs” for development, unlocking and liberating all economic resources. This includes a strong decentralization process that fosters initiative and flexibility, enhancing the effectiveness of public investment and following the principle: “Local authorities decide, local authorities implement, local authorities are responsible.” Among these, the swift issuance of implementation documents for four key laws—the Planning Law, the Investment Law (amended), the Public-Private Partnership Investment Law, and the Procurement Law (amended)—is essential. Addressing any issues, inconsistencies, or overlaps will help accelerate the implementation of key national public investment projects.
  • Second, it is critical to create special investment procedures and “green lanes” to shorten the processes for innovation, semiconductor, and high-tech projects in industrial zones. These projects should be quickly launched and put into operation, helping Vietnam remain an attractive destination for global FDI flows, which are declining amidst increasing competition among countries. Notably, the government and leading global technology company NVIDIA have signed agreements to establish AI research and development centers and AI data centers. This milestone event is expected to help position Vietnam as a leading AI research and development hub in Asia.
  • Third, urgent action is needed to streamline government structures and create an effective, efficient national governance system. This includes adopting practical management methods from the private sector for public sector management, enhancing performance and controlling work outcomes. Further decentralization and devolution of power, along with the elimination of centralized authority, will foster a competitive environment within the public administration, promoting the flexible public-private management model.
  • Fourth, the government should proactively build different GDP growth scenarios for 2025 and the 2026-2030 period. These growth scenarios should specify the required growth in each sector and area, identifying the specific potential, drivers, and resources to prepare and exploit for development. Additionally, flexible and focused fiscal and monetary policies should be implemented, coordinated harmoniously with other policies, ensuring that credit policies and interest rates are aligned with the needs and interests of the economy’s stakeholders.
  • Fifth, the government should stimulate aggregate demand by increasing consumption, focusing on domestic market development. Effective trade promotion programs should be implemented to expand domestic consumption through digital platforms and e-commerce. Campaigns encouraging Vietnamese people to prioritize using domestic products should be promoted. Investment in modernizing distribution systems in rural and mountainous areas should be prioritized to boost the consumption of Vietnamese goods. Local efforts to stimulate domestic consumption in areas with distinctive products and advantages should be intensified. Moreover, the quality of services—particularly dining, accommodation, and domestic tourism—should be improved to attract more international tourists.
  • Sixth, promote and create breakthroughs for new growth drivers, promote the development of green economy, circular economy, data economy, e-commerce, and new business models. Supporting businesses to access and apply artificial intelligence, digital transformation, green transformation, circularity, low carbon emissions, resource saving, sustainable development (ESG)…; promote the export of green and environmentally friendly products./.

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