Vietnam’s Economy Poised to Propel ASEAN’s Expansion

Organizations of international repute are suggesting that Vietnam may have the highest GDP growth among the ASEAN nations in 2021.

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Vietnamese Economy Likely to Lead ASEAN's Growth
By 2024, with economic growth forecast to be at 6%, the nation’s GDP growth will rank second in Southeast Asia, only behind the Philippines at 6.2%. Photo: VOV

This news comes after the recent release of forecasts on the Vietnamese economy by the Board of Executive Directors of the International Monetary Fund (IMF), predicting a strong recovery in 2022 followed by a slowdown due to challenges faced at the end of last year and the first half of this year.

The IMF foresees economic growth being driven by recovering exports and policies aimed at loosening restrictions, particularly fiscal policies.

Inflation is expected to remain controlled below the target of 4.5%, and the nation is projected to experience high growth in the medium term through structural reforms.

The executive directors of the IMF have commended Vietnamese authorities for their swift actions in maintaining economic stability in the face of challenges at home and abroad. However, further efforts are needed to protect macro-financial stability, implement reforms, address vulnerable factors, and ensure sustainable, inclusive growth.

In terms of monetary policy, there is limited room for loosening, so fiscal policy needs to play a key role in supporting economic activity when necessary.

The IMF recommends strengthening the fiscal framework, improving budgeting processes, and increasing revenue over the medium term to support ambitious socio-economic development plans.

The organization acknowledges competent agencies for effectively controlling inflation risks but emphasizes the need for cautious monetary policy in a complex and limited policy context. The IMF also encourages flexible exchange rates and modernization of the monetary policy framework.

GDP growth remains optimistic

A foreign-invested footwear material factory in Thuan An city, Binh Duong province (Photo: VNA)
A foreign-invested footwear material factory in Thuan An city, Binh Duong province. Photo: VNA

Despite the challenges faced by the Vietnamese economy this year, experts from the Asian Development Bank (ADB) forecast a GDP growth rate of 5.8%, slightly lower than the previous forecast in April. However, this growth rate is still the highest in Southeast Asia.

By 2024, the nation’s GDP growth is predicted to reach 6%, ranking second in Southeast Asia, only behind the Philippines at 6.2%. Inflation is projected to decrease, reaching 3.8% in 2023 and 4% in 2024. The country is recognized as one of the fastest-growing economies in Asia by the Pyn Elite Fund, with expected annual growth rates of 5% to 7% in the near future and annual profit growth of listed companies remaining between 12% and 25%.

Foreign media upbeat about Vietnam’s economy

Vietnam's trade surplus in the first nine months is estimated at $21.68 billion. (Photo: VNA)
Vietnam’s trade surplus in the first nine months is estimated at $21.68 billion. Photo: VNA

Foreign press agencies have also highlighted Vietnam’s economic growth, citing positive signs of recovery. French wire service AFP mentioned loan interest rate reductions, tax payment extensions, and increased public investment as factors contributing to the 5.33% growth in the July-September period. Nikkei Asia emphasized the role of the services sector, retail, and tourism in boosting economic output. It also mentioned the recovery of the manufacturing sector and increased foreign direct investment in Vietnam. China’s Xinhua News Agency reported that Vietnam attracted nearly $20.21 billion in FDI from the start of the year to September 20, a 7.7% year-on-year growth.

Rosy Huong