Accelerating 2024 GDP growth may hit 7% in Vietnam; industrial and construction sectors to drive expansion

Strong economy: A farmer picks coffee cherries at a farm in Di Linh district. The International Monetary Fund has forecast Vietnam’s GDP to expand 6% this year, up from 5% in 2023 – a pace that would make it among Asia’s fastest growing economies. — Reuters

HANOI: Vietnam’s economic growth is accelerating and could meet or exceed the government’s 6.5% target this year, according to Planning and Investment Minister Nguyen Chi Dung.

The minister said economic expansion may even reach 7% this year as improving industrial and construction sectors drive growth, according to a statement on the government’s website citing officials.

“If growth momentums continue to be maintained and accelerate, the growth rate in 2024 is likely to reach or even exceed the target set by the National Assembly,” Dung said.

The International Monetary Fund has forecast Vietnam’s gross domestic product (GDP) to expand 6% this year, up from 5% in 2023 – a pace that would make it among Asia’s fastest growing economies.

The economy is also benefitting from increasing exports and foreign direct investment, Dung said.

Pledged foreign direct investment (FDI) for the year may reach US$39bil to US$40bil, up from last year, according to Tran Quoc Phuong, deputy minister of planning and investment.

The country posted pledged FDI at US$36.6bil as of December 2023.

One continuing drag on the economy, though, is the apparent reluctance of government officials to release infrastructure funds amid the anti-graft campaign that has frozen decision-making.

Disbursements of public investment funds in the first half of the year are lower than the same period last year, at about 29.4% of Prime Minister Pham Minh Chinh’s plan versus about 30.5% in 2023.

Chinh has repeatedly pushed officials to quicken expenditures of approved investment funds.

The ministry laid out two economic growth scenarios for the rest of the year. In the first, the third and fourth quarters could see GDP rise 6.5% and 6.6%, respectively, the post said.

For the second scenario, the last half of the year could unfold with third-quarter GDP growth at 7.4%, and the final period reaching 7.6%, it said.

Chinh urged officials to push for third-quarter economic growth of 6.5% to 7%.

He also instructed the central bank to ensure adequate money supply and continued policies to reduce lending interest rates and keep borrowing costs low to support businesses. — Bloomberg