Viet Nam’s economic growth is expected to accelerate in 2024, driven by a rebound in manufactured exports, tourism, and recovering consumption and business investment, according to a new report by the World Bank.
The report forecasts Viet Nam’s economy will grow by 6.1 percent in 2024 and 6.5 percent in both 2025 and 2026, up from 5 percent last year. Titled "Reaching New Heights in Capital Markets," the report underscores the resilience of the Vietnamese economy despite rising global challenges but notes that it has not yet returned to its pre-pandemic growth trajectory.
Enhanced public investment is suggested as a means to provide short-term stimulus while addressing emerging infrastructure gaps in energy, transport, and logistics. The quality of bank assets remains a concern due to rising non-performing loans (NPLs), which require close monitoring by authorities.
“During the first half of the year, Viet Nam’s economy benefitted from the rebound in export demand,” said Sebastian Eckardt, World Bank East Asia and Pacific Practice Manager for Macroeconomics, Trade, and Investment. “To sustain growth momentum not only for the rest of the year but over the medium term, the authorities should deepen structural reforms, step up public investment while carefully managing emerging financial risks.”
A special chapter of the report emphasizes that developing capital markets would provide vital long-term funding for Viet Nam's economy and help achieve its goal of becoming a high-income nation by 2045. It identifies key challenges such as underdevelopment of institutional investors and underutilization of the Viet Nam Social Security fund (VSS).
The report recommends a stronger policy framework where VSS could drive capital market development. Policies enabling reclassification from Frontier Market status to Emerging Market status could attract more foreign investors alongside reforms enhancing market transparency and investor protection. Effective coordination among financial regulators is deemed crucial for achieving these goals.
"Billions of dollars of global investment funds will flow into the capital markets if Viet Nam is upgraded to Emerging Market status," said Ketut Ariadi Kusuma, World Bank Senior Financial Sector Specialist. "At the same time, gradual diversification of VSS investment is key not only to improve its long-term investment returns but also to fuel Viet Nam’s economic growth through investments in the corporate sector."
Taking Stock is the World Bank’s bi-annual economic report on Viet Nam.