The International Monetary Fund (IMF) expects Vietnam's GDP to grow by 6.1% this year, higher than the organization's forecast in June.
Assessing after the regular consultation ended at the end of August, IMF experts said that Vietnam's economy will grow by 5% in 2023 despite many challenges, thanks to the Government's drastic policies. Turmoil in the real estate market, financial stress and sharp decline in exports have affected the economy.
Growth will begin to recover from late 2023, thanks to exports and tourism, as well as looser fiscal and monetary policies. As a result, the IMF forecasts GDP growth this year at 6.1%, up from nearly 6% in its June report.
Previously, Singaporean bank United Overseas Bank (UOB) downgrade growth forecast Vietnam's GDP this year due to Typhoon Yagi, from 6% to 5.9%. Meanwhile, ADB kept its growth forecast at 6%. The World Bank (WB) expects this rate to be 6.1%. Meanwhile, Vietnam set a GDP target of 6.5-7% this year.
Experts believe that domestic demand and real estate will continue to recover. Inflation is expected to be around 4-4.5% this year, mainly due to rising food prices. This level is equivalent to the State Bank's target.
However, the IMF believes that risks to Vietnam's economy remain high. In the first eight months of this year, Vietnam earned over $265 billion from exporting goods, up nearly 16% over the same period last year. But exports - the main driver of the economy - could decline if global growth falls short of expectations, geopolitical tensions persist or trade disputes escalate.
At the same time, sluggish real estate and corporate bond markets are also affecting the operations of banks, undermining financial stability. Exchange rate pressure may persist as monetary policy remains loose. According to a report by the State Bank last month, the Vietnamese dong had depreciated by nearly 5% against the USD since the beginning of 2024. By early August, this rate had dropped to 3.85%.
The IMF assessed that the Vietnamese Government has responded quickly to stabilize the macroeconomy when the post-pandemic recovery process faces many challenges at home and abroad. The organization also welcomed Vietnam's revision of the Law on Credit Institutions, the promulgation of the Power Master Plan VIII and the plan to develop an Emissions Trading System to achieve climate goals and promote energy security. However, experts recommended that Vietnam deepen further reforms and ensure green, inclusive growth in the medium term. Public investment and social protection expansion also need to be strengthened. The fiscal framework, budget preparation and revenue collection processes in the medium term need to be strengthened to support the development plan.
Going forward, the IMF believes that authorities should remain cautious in conducting monetary policy and increasing the resilience of the financial system. They also emphasize the need to improve the toolkit to prevent and manage banking crises.
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