What is the driving force that helps Vietnam's GDP reach 8%?

In a recently released report by VinaCapital, the Vietnamese National Assembly has officially approved a plan to increase public investment in 2025 from 6% of GDP to 7% of GDP; at the same time, raising the GDP growth target in 2025 to 8%. Thus, the expected increase in spending by 1% of GDP on infrastructure projects is expected to help Vietnam achieve the new GDP growth target, as well as support long-term growth prospects and attract FDI inflows into Vietnam.

Specifically, Vietnam's public investment plan this year will be increased to 36 billion USD (compared to the 31 billion USD approved at the end of last year) and increase by nearly 40% compared to 2024. This is expected to offset the disadvantage that may affect GDP growth this year, when export growth to the US is forecast to slow down after an impressive increase of 23% in 2024.

In addition, some of the Government's latest moves also show its determination in disbursing public investment this year, such as: Initiating and approving investment policies for a number of major projects; operating the first metro line in Ho Chi Minh City in December 2024; Officially promulgating relevant laws to speed up the project approval process, simplify investment allocation and promote greater private sector participation in infrastructure projects...

Mr. Michael Kokalari, Director of Macroeconomic Analysis and Market Research Department (VinaCapital). (Photo: Investment Newspaper)

Regarding fiscal space, Mr. Michael Kokalari - Director of Macroeconomic Analysis and Market Research of VinaCapital said that Vietnam has abundant resources to increase public investment spending, in which government debt is lower than 40% of GDP and the undisbursed budget is estimated to be up to 40 billion USD.

The main bottleneck in accelerating public investment disbursement is the difficulties in policy mechanisms in the process of approving and developing large-scale projects. Thus, the adoption of laws will help speed up the progress and ensure that disbursement targets can be achieved.

According to Mr. Kokalari, although Vietnam is facing challenges in export growth, especially for the US market, increasing public investment by 40% will contribute about 2 percentage points to the GDP growth target of 8% in 2025. Public investment will be an important factor helping Vietnam maintain strong growth in the context of global difficulties.

In addition, Mr. Michael Kokalari also predicted that in 2025, foreign investors' sentiment will improve compared to 2024, with the expectation that FDI capital will continue to flow into Vietnam. Stable economic policies, along with Vietnam meeting almost all international standards to upgrade to emerging market status, are expected to attract more investment capital from international markets. He also said that continuing to promote administrative reform and simplify procedures will create favorable conditions for businesses and investment activities in Vietnam in the near future.

Source: https://thoidai.com.vn/dong-luc-nao-giup-gdp-viet-nam-dat-8-212527.html