Viet Nam well-positioned to capture increased share of global production and exports

CEO and head of Banking and Coverage of Standard Chartered Bank Viet Nam Nguyen Thuy Hanh made that above statement in her recent interview with VGP.

Looking at Viet Nam's economic performance in 2024, Nguyen said, the manufacturing sector has experienced solid growth, and relatively accommodative monetary policy may have also contributed to the economic recovery. However, Standard Chartered remains cautious on Vietnamese economy near-term given the recent moderation in macroeconomic data.

Referring to the highlight of Viet Nam's economy over the past year, she said, year-to-date credit growth was at 16.6 percent as of November 30, higher than the 2013-2023 average (around 14.4 percent).

On the trade front, exports grew 11.4 percent in the first 11 months of 2024, while imports rose 16.4 percent; with electronics exports and imports continuing their recovery.

Foreign direct investment (FDI) appetite remains strong, as indicated by inward FDI flows. Disbursed FDI increased by 7.1 percent in over the last 11 months of the year, while pledged FDI rose by 1 percent.

Viet Nam should diversify its economy away from manufacturing

Regarding Viet Nam's economic prospects in 2025, Nguyen said, Standard Chartered forecasts strong GDP growth of 6.7 percent for Viet Nam in 2025, with growth easing from 7.5 percent in the first half to 6.1 percent in second half.

CEO of Standard Chartered recommended that Viet Nam should prioritize clarity in its policy outlook and political transition, which would help boost investor confidence.

"We expect increased business activity in 2025 and beyond, with foreign investment supporting growth", she shared.

She spoke highly of the government's aims to promote new economic drivers, such as digital transformation, the green transition and the circular economy.

To foster sustainable medium-term growth, Viet Nam needs to step up its preparedness for natural disasters, diversify its economy away from manufacturing and expand its FDI sources away from Asia, Nguyen suggested.

Diversifying investment sources and enhancing the business environment will be critical for Viet Nam to realize its potential and accelerate economic development in 2025, she noted.

According to Nguyen, the recent U.S. Federal Reserve System (FED) rate cuts were expected to support Asian currencies, including the VND. However, stronger-than-anticipated U.S. economic data has led to a less supportive environment for Asian FX markets. Trade policy uncertainties and inflation-inducing measures under Trump could further complicate currency stability in the region.

"We expect the State Bank of Viet Nam (SBV) to hike rates by 50bps in the second quarter of 2025. The government's desire for stronger economic growth may support low interest rates for now", she told.

Viet Nam's balance of payments (BoP) is driven largely by goods trade and FDI; external-sector performance has stayed relatively solid. An upward reversal in commodity prices would pose a risk to the external outlook.

Lower USD rates may help to reduce capital outflows, while a sustained trade surplus and strong tourism should support the VND, she added./.