GDP growth in 2024 could reach 7.25%, many driving forces for next year

The Central Institute for Economic Management estimated that GDP in 2024 would increase by 7.06% but has now raised the forecast to 7.25%.

The Central Institute for Economic Management estimated that GDP in 2024 would increase by 7.06% but has now raised the forecast to 7.25%.

GDP growth in 2024 could reach 7.25%

Sharing at the Investment 2025 Workshop: Decoding variables - Identifying opportunities organized by Investment Newspaper on the morning of December 12, Dr. Luong Van Khoi, Deputy Director of the Central Institute for Economic Management (CIEM), said that growth in 2024 will have a big breakthrough, possibly even reaching 7.25% for the whole year. Previously, the Central Institute for Economic Management's calculations estimated that GDP in 2024 would increase by 7.06%, but the forecast has now been raised.

In 2024, the Government has issued focused instructions, world demand for Vietnamese goods, thereby creating a growth breakthrough in 2024 despite complex geopolitical developments, large markets from 16 FTAs,...

Dr. Luong Van Khoi, Deputy Director of the Central Institute for Economic Management (CIEM)

Almost all planned targets of some basic economic indicators assigned by the National Assembly have been achieved and exceeded. Total social investment capital compared to GDP (%) by the first 9 months of 2024 has only reached less than 30% while the plan is 35%. State capital is the fulcrum to maintain the strength of the economy after Covid-19 and natural disasters. Capital from the central budget has only disbursed more than 73%. From now until the end of the year, with only 1 month left, the possibility of achieving this target is relatively difficult. However, with commitments from leading sectors such as Ho Chi Minh City or Hanoi, the above target can still be achieved, although difficult.

There are many opinions that Vietnam's economy grows in breadth, according to calculations, I think that Vietnam's economy is approaching depth with the contribution of labor productivity factors in the state sector and the private and residential sectors. Meanwhile, the FDI sector is actually growing in breadth, exploiting cheap labor and natural resources, raising the issue of having appropriate policies to attract quality FDI capital flows.

According to Dr. Luong Van Khoi, business efficiency has nearly doubled compared to 10 years ago. However, the overall efficiency level has not met expectations. Specifically, for textile, footwear and electronics enterprises, which are key export industries, efficiency only reaches about 50% in terms of technical efficiency and scale efficiency. Typically, the proportion of lost value added due to inefficiency/GDP of the textile and garment industry is 1.8%. The cause comes from internal factors of enterprises such as management level, science and technology level, people... but also includes external factors such as the business investment environment, shocks in the global market, Vietnam's response to shocks... The industries are still mainly processing, so the value brought is low.

This is also a big unknown because if internal factors can be overcome and external factors can be improved to improve business efficiency, the textile and garment industry alone can increase GDP by 1.8%. If the above factors are improved, representatives from CIEM believe that Vietnam can completely achieve double-digit growth.

According to the Deputy Director of the Central Institute for Economic Management (CIEM), there will be many other unknowns next year. Forecasting world trends in 2025, the complicated developments in the world's geopolitical situation will also be an important unknown that will greatly affect the world economy and the Vietnamese economy, especially for an economy with a large openness like Vietnam. For the US, Dr. Luong Van Khoi expects that there will still be a lot of policy space, generally following the trend of loosening monetary policy. This will have a great impact on exchange rates and capital markets. In addition, the possibility of the US withdrawing from the Paris Agreement on climate will affect international investment in this field. However, the Trump administration may prioritize the exploitation of fossil fuels, thereby reducing oil prices, affecting production input prices.

According to Dr. Luong Van Khoi, the import-export turnover of Vietnamese goods in 2024 is estimated to reach 800 billion USD, expected to increase more strongly than in 2025. Although the economic growth of the 5 major partner economies will improve and decline alternately, the demand for goods in the world, especially the 5 major partners, will increase sharply. Therefore, in 2025, the Vietnamese economy will certainly have a breakthrough in growth.

Some drivers for Vietnam's economic growth in 2025 were pointed out by CIEM representatives. In particular, inflation remains under control in 2025. At the same time, all three economic sectors are still growing steadily, with the industrial and service sectors growing better. People's living standards have changed and the number of international tourists is expected to continue to grow well to help boost domestic market growth. Exports and FDI attraction are still bright spots with positive growth rates.

In addition, the increasingly complete infrastructure, especially the expressway, has been extended and expanded to many localities, helping to increase inter-regional connectivity, and the 500kV high-voltage line 3 has been put into operation, helping to ensure stable energy between regions, especially in the dry season. The sharp increase in State budget revenue in 2024 is the basis for the State to continue to increase public investment expenditure and expenditure to implement development support policies in 2025. In addition, a number of newly issued policies will help form a better institutional framework for economic development, especially new laws issued in 2023 and 2024 such as the Land Law, Housing Law, Real Estate Business Law, and Bidding Law will take effect and be institutionalized in detail.

According to Mr. Khoi, institutional development for 2025 will be more favorable thanks to the content of institutional improvement with more easily identifiable and observable innovations. The efforts and determination of the Government and localities continue to be enhanced because the Government's management in recent years has always put efforts and determination first, especially since 2025 is the "finish line" year of the 5-year Socio-Economic Development Plan 2021 - 2025, laying the foundation for building the 5-year Socio-Economic Development Plan 2026 - 2030.

In particular, the business sector has recovered and experienced good growth and development. At the same time, digital transformation, innovation and application of Industry 4.0 technology in businesses and the political system will take place strongly and drastically in the coming year.

“In the application of 4.0 technology, artificial intelligence (AI) has a great impact on all aspects of socio-economic life. In the field of production and business, AI helps predict market trends and improve customer experience, enhance operational efficiency, and optimize supply chains. AI is expected to contribute up to 15.7 trillion USD to global GDP by 2030. Countries must keep up with AI trends and anticipate the increasing role of AI in consumer decisions. Therefore, the CIEM representative also emphasized that the use of AI is one of the urgent requirements to be implemented.

New drivers such as digital transformation, innovation, AI, or the simultaneous implementation of planning by 63 provinces and cities based on exploiting potential advantages, etc. will be factors contributing to growth. "Once AI is applied to improve business performance, there is little doubt about double-digit growth rates," predicted Dr. Luong Van Khoi.

Source: https://baodautu.vn/tang-truong-gdp-nam-2024-co-the-dat-725-nhieu-dong-luc-cho-nam-toi-d232288.html