Editorial: The year 2024 witnessed many fluctuations in the world's political and economic situation. Domestically, the Vietnamese economy has "overcome thousands of obstacles" to reach the finish line with impressive figures in growth, exports, foreign investment attraction, etc. Along with the revolution of streamlining the apparatus, high-speed railways, nuclear power, etc., the Vietnamese economy is expected to create a solid momentum to enter the new era.
Join VietNamNet to review the outstanding events of the world and Vietnamese economy in 2024 with new confidence and new vitality for the next journey.
Getting through a tough year
Vietnam's economy in 2024 will record strong growth, possibly reaching over 7% and continuing to rank first among the largest economies in the ASEAN region (ASEAN-6).
This result may not be surprising to international investors, as Vietnam’s economy is making a breakthrough and is considered a bright star in Asia; but it may be a bit surprising to domestic investors due to the difficulties and challenges the country is facing.
That is the lack of brightness in the private sector's investment and production activities, the slow public investment, the sluggish recovery of the real estate market, a series of enterprises facing the burden of debt, including bonds. Besides, there are escalating exchange rates, weak consumer demand, the impact of Typhoon Yagi...
Right at the beginning of the year, the USD/VND exchange rate increased sharply, reaching 25,000 VND to 1 USD by the end of March, an increase of nearly 2.4% compared to the beginning of the year. Then, the exchange rate jumped to over 25,500 VND (Vietcombank selling price) from mid-November, an increase of about 4.4% compared to the beginning of the year. This has put pressure on the State Bank's monetary policy management in an effort to support economic growth.
The banking system had a surplus of money at times, with overnight interest rates on the interbank market at 0.15-0.5% per year for most of the first quarter. Credit growth was negative in the first two months of the year and only escaped this situation in March, increasing by 0.26% compared to the end of 2023 thanks to a series of support solutions from the Government.
The real estate market recorded feverish auctions in some areas in Hanoi and the prices of apartments and land in the center and suburbs of the two big cities of Ho Chi Minh City and Hanoi increased sharply, but transactions were quite quiet, showing signs of illusion. Real estate businesses continued to suffer losses and debt.
The pressure on maturing bonds is great. Mirae Asset Securities Company said that in December, about 39 trillion VND worth of bonds will mature, of which 7 trillion VND comes from real estate businesses. About 16 bonds from 15 different businesses are likely to be unable to pay on time. According to VIS Ratings, the total value of overdue bonds in the whole market will reach about 189 trillion VND from April 2022 to November 2024.
Weak consumer demand. Total retail sales in 11 months reached over 5.8 quadrillion, up 8.8% compared to November 2023, lower than the 9.7% increase in the same period. Excluding the price factor, the increase was only 5.8%, compared to 7% in the same period. Public investment in 11 months is estimated to reach over 73% of the annual plan.
Cash flow into the economy as well as investment channels is quite low. Idle money is still flowing strongly into the banking system, continuously reaching new peaks, reaching about 14 quadrillion VND by the end of September.
Meanwhile, not much money was poured into the stock market, causing the VN-Index to not surpass 1,300 points all year, mainly hovering around the 1,200 point mark that had been established since 2006. Foreign investors net sold about 3.1 billion USD worth of Vietnamese stocks in 11 months, a historical record high. Some pillar stocks on the floor had their capital withdrawn by large organizations such as Vinhomes, Masan...
The gold market also had an unusual year, with prices rising sharply following the world, at times 18-20 million VND/tael higher than international prices. The State Bank then introduced many measures to reduce the difference to 3-4 million VND, but transactions remained quiet.
Bright signs
Despite many difficulties, Vietnam's economy still had a year of strong growth, leading the region. Many positive signals promise bright prospects in 2025.
The most obvious are the high growth forecasts from major organizations around the world. The Asian Development Bank (ADB) raised its estimate of Vietnam's GDP growth in 2024 to 6.4% instead of 6%, and raised its forecast for 2025 to 6.6% from 6.2% previously. UOB Bank forecasts Vietnam's GDP growth to reach 6.6% in 2025 and maintains its forecast for 2024 at 6.4%... Vietnam targets 6.5-7% for 2024 and strives to reach 7-7.5% in 2025.
The brightest signal appeared in the last month of the year. That was the return of billionaire Jensen Huang after a year, along with Nvidia's decision to choose Vietnam to build the third artificial intelligence (AI) research center in the world, after the US and Taiwan (China), or Google also chose Vietnam as a strategic expansion location.
Billionaire Jensen Huang shared that Vietnam is "Nvidia's second home" and believes that Vietnam possesses special superpowers and many advantages.
Previously, in November, an Apple supplier – Foxconn announced an $80 million investment in chip production in Bac Giang province, while billionaire Mark Zuckerberg's Meta plans to expand production of virtual reality devices.
Billionaire Elon Musk's SpaceX also revealed its intention to invest 1.5 billion USD in Vietnam, while the Trump Organization will invest a similar amount in Hung Yen.
The long-term economic outlook is bright as FDI continues to flow into Vietnam. In 2024, the number of licensed industrial parks will skyrocket, with dozens of new zones covering thousands of hectares. Bac Giang, Ha Nam, etc. are prominent names. Many big names such as Vinhomes have also entered this field.
In 2024, Vietnam will be among the 15 developing countries attracting the largest FDI in the world, with 31 billion USD in 11 months. Vietnam has many free trade agreements (FTAs), including many new generation FTAs. The import and export turnover of goods in the year exceeded 700 billion USD.
Donald Trump’s election victory is expected to be a factor that will promote the trend of shifting production to Vietnam, which has favorable investment policies, low labor costs and a stable economy. Investors have high expectations for technology companies such as FPT, VNG, Viettel, VNPT, CMC, VNPay, etc.
Expectations also lie in the fact that Vietnam is showing signs of attracting significant capital flows from technology giants. According to Oxford Economics, Vietnam is gradually becoming an important center in the global semiconductor chip industry, in addition to its manufacturing and processing power, including the production of electronic components.
With this trend, Vietnam can grow more sustainably, faster, and reduce dependence on the real estate sector.
Also in 2024, Vietnam has made progress in infrastructure, including the completion of the 500kV line 3, the approval of the North-South high-speed railway project, and the acceleration of metro lines... For the first time in history, a Vietnamese electric car company took the number 1 position in the domestic automobile market. In addition, many amended laws came into effect to support economic development, such as the group of laws related to real estate...
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