AsemconnectVietnam - According to the World Bank (WB), Vietnam's economy is showing different signs of recovery, so GDP growth is forecast to reach 5.5% in 2024 and gradually increase to 6% in 2025.

The WB's recently released report on Vietnam's Economic Review updated in April of 2024 said that after experiencing a period of deceleration in 2023, the economy is showing some signs of recovery at the beginning of the year 2024.
Exports are recovering, domestic consumption and private investment are also on the rise. Exports at constant prices are expected to increase by 3.5% in 2024, reflecting gradually improving global demand.
The real estate sector is also expected to recover stronger later this year and next, boosting domestic demand as investors and consumers gradually regain confidence. Total investment and private consumption at constant prices are expected to increase by 5.5% and 5% in 2024, respectively.
Inflation is forecast to increase slightly from an average of 3.2% in 2023 to 3.5% in 2024, mainly due to the expected increase in prices of State-managed goods such as education and healthcare, contributing 6.2% and 5.4% respectively to the basket of goods used to calculate the consumer price index (CPI). Inflation will fall to 3% in 2025 and 2026 due to expectations that energy and raw material prices will stabilize.
Therefore, the WB report forecasts that Vietnam's economy is forecast to grow by 5.5% in 2024 and gradually increase to 6.5% in 2026, depending on the level of recovery of external demand and private sector investment.
The current account is expected to continue to be in surplus in 2024, mainly thanks to the goods trade balance. The surplus may decrease in 2025-2026 due to increased imports as private consumption as well as the need to import inputs for production as exports gradually recover. Foreign direct investment (FDI) flows are expected to remain stable in the short and medium term, as foreign investors continue to be interested in Vietnam.
The report also emphasizes the importance of continuing to support the economy through fiscal policy to underpin the recovery. Therefore, the report recommends accelerating the pace of implementation of infrastructure investment projects funded by public resources. This would help stimulate the economy further, with potential GDP growth of 0.1 percentage points for every 1 percentage point increase in public investment as a proportion of GDP.
Regarding this issue, Mr. Sebastian Eckardt, Director of the World Bank's East Asia and Pacific Region for Macroeconomics, Trade and Investment, said that investing in public infrastructure projects creates many long-term benefits in addition to immediate economic stimulation. Efforts to strengthen public investment management will also address critical infrastructure bottlenecks in energy, transportation and logistics, which underpin Vietnam's long-term economic growth.
Meanwhile, in terms of monetary policy, the room for further interest rate cuts is limited due to the interest rate difference between domestic and international markets.
According to WB experts, ensuring the stability of the financial sector is still the most important thing, focusing on managing potential risks related to increased bad debt, including causes due to the value of bad debt. Assets decrease in the real estate market. The capital buffers of commercial banks are currently relatively thin and the decline of the real estate market may cause these banks' capital resources to decline further.
Therefore, according to the WB, competent authorities can issue policies to improve the capital adequacy ratio of banks and strengthen the institutional framework for safety supervision, early intervention and handling of weak banks to prevent bank failures causing systemic problems and crisis management.
CK
Source: VITIC/ haiquanonline.com.vn