Viet Nam's growth prospects remain positive through lens of int'l financial institutions

Typhoon Yagi, the strongest in Asia this year, costs Viet Nam around VND50 trillion (US$2 billion) and is expected to reduce the country's GDP growth by 0.15 percent.

However, international organizations are still upbeat about Viet Nam's economic resilient capacity against headwinds.

In its September report, the IMF revised its 2024 GDP growth forecast for Viet Nam up to 6.1 percent, higher than its own projection of nearly 6 percent in the previous June version. This positive outlook is underpinned by strong external demand, resilient foreign direct investment (FDI), and accommodative government policies.

The Asian Development Bank (ADB) has maintained a positive economic outlook for Viet Nam, forecasting its GDP growth at 6.0 percent this year and 6.2 percent next year.

In the same vein, the Hongkong and Shanghai Banking Corporation (HSBC) also maintained its GDP growth forecast for Viet Nam at 6.5 percent for both 2024 and 2025 in its "Asian Economics Quarterly – Comin' for a landing" report.

According to the HSBC, the manufacturing sector has emerged strongly from last year's woes. Purchasing Managers' Indexes (PMIs) have registered five consecutive months of expansion, while industrial production index (IPI) has registered a bounce-back in activity for the textiles and footwear industry as well.

In the 2024 Article IV Consultation with Viet Nam, IMF assessed that the economy is supported by continued strong external demand, resilient foreign direct investment and accommodative policies.

The international financial institution suggested Vietnamese authorities take swift actions to sustain macro-financial stability after the economic recovery from the pandemic faced domestic and external headwinds.

Exports, a key driver for Viet Nam's economy, could weaken if global growth disappoints, global geopolitical tensions persist or trade disputes intensify. Given easy monetary conditions, if exchange rate pressures were to persist for longer, it could lead to a larger pass-through to domestic inflation.

"Viet Nam's economy showed robust recovery in the first half of 2024 and continues to maintain momentum despite global uncertainties," said ADB Country Director for Viet Nam Shantanu Chakraborty. "This steady recovery has been driven by improving industrial production and a strong rebound in trade."

Shantanu Chakraborty applauded Viet Nam's extraordinary efforts to overcome the devastated consequences of the typhoon.

At a recent meeting to evaluate the impact of Typhoon Yagi, Prime Minister Pham Minh Chinh called for doubling efforts to achieve the preset growth target of 7 percent this year./.