ADB sustains Viet Nam’s 2024 growth forecast at 6% despite super typhoon Yagi

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.

ADB attributed improving industrial production and a strong rebound in trade to the steady recovery.

The industrial sector continues to be a primary driver of growth, with external demand for major electronics fueling production.

Viet Nam's recovery has also been supported by a rebound in the services sector and stable agricultural output. However, domestic demand remains sluggish, and subdued global economic prospects add uncertainty.

Inflation is expected to remain moderate at 4% for 2024 and 2025, although geopolitical tensions, including the conflict in the Middle East and the Russian invasion of Ukraine, could impact oil prices and potentially boost inflation.

The report highlighted several downside risks that could slow the country's growth momentum. External demand in major economies will remain weak, while geopolitical tensions and uncertainties related to the U.S. election in November could lead to trade fragmentation, adversely affecting exports, manufacturing activity, and employment.

Raising domestic demand will require stronger fiscal stimulus measures such as accelerating public investment implementation, while maintaining low interest rates. Coordinated policy measures are essential to economic recovery, given relative price stability and weak demand.

Viet Nam's monetary policy will continue to aim for both price stability and growth, despite limited policy space. However, the heightened risk of nonperforming loans due to continued regulatory relaxation on loan extensions limits the potential for further monetary easing. Any additional loosening of monetary policy should be closely coordinated with an expansionary fiscal policy, along with accelerating institutional reforms to support the economy.

Earlier, on September 18, the Vietnamese Ministry of Planning and Investment recently presented to the Government three economic growth trajectories for 2025, with the highest rate forecast at 7.5 percent.

According to the July edition, ADB reported that Viet Nam's growth projections for 2024 and 2025 remain unchanged. Going forward, the economic recovery should continue, with growth forecasts remaining at 6 percent for 2024 and 6.2 percent for 2025.

HSBC raised its forecast for Viet Nam's GDP growth this year to 6.5 percent, as compared with the previous projection of 6 percent, following the country's better-than-expected performance in the first half.

The International Monetary Fund pegged Viet Nam's economic growth at nearly 6 percent this year, driven by exports, foreign direct investment, and policy support.

On July 16, the ASEAN+3 Macroeconomic Research Office (AMRO) also released the July edition of its ASEAN+3 Regional Economic Outlook (AREO), raising its forecast for Viet Nam's GDP growth to 6.3 percent in 2024.

Regarding the impacts of Yagi, the Vietnamese government's preliminary report shows that the typhoon damaged VND50 trillion (US$2.04 billion). It is expected to  slow down Viet Nam's GDP growth by 0.15 percentage points./.