World Bank raises Việt Nam’s growth forecast to 6.8 per cent

World Bank raises Việt Nam’s growth forecast to 6.8 per cent

As export demand may decrease this year, Việt Nam should strengthen domestic business activities and services to drive economic growth, says Mariam Sherman, World Bank director for Việt Nam, Cambodia and Laos.

 The World Bank (WB) has raised the forecast for Việt Nam's real GDP growth this year to 6.8 per cent, which is 0.2 percentage points higher than its earlier projection in January, but lower than the Government’s target of 8 per cent.

The projection was released on Tuesday in the report 'Taking Stock: Electrifying Journeys – E-mobility Transition in Viet Nam', which is the WB's latest economic update for Việt Nam with a focus on the decarbonisation of road transport.

The organisation has also raised Việt Nam’s growth forecast for 2026 to 6.5 per cent, which is 0.2 percentage points higher than the previously projected figure of 6.3 per cent.

Real GDP is a measure of GDP that takes into account changes in prices, or inflation, unlike nominal GDP which has not been adjusted for prices.

Speaking on the forecast at a press conference on Tuesday, the WB director for Việt Nam, Cambodia and Laos, Mariam Sherman, said that although a rebound in technology product exports helped Việt Nam achieve the growth rate of 7.09 per cent last year, this export momentum is expected to slow this year. 

“This outlook remains positive and is supported by a projected recovery of domestic demand,” she said. “However, increasing uncertainties lie ahead and the current momentum could falter if global economic headwinds and trade disruptions materialise. 

“These uncertainties underscore the need for vigilance and adaptability and policies to navigate the evolving economic landscape in order to sustain and enhance economic prospects.” 

Việt Nam can continue to position itself as an attractive destination for business, but further supporting domestic activities and services will be increasingly crucial to drive growth, Sherman added.

“Given the risks from the external environment, facilitating the recovery of the real estate sector and expanding quality public investments can play a pivotal role (in growing the economy),” she said. 

“By fostering a conducive environment for business and encouraging private consumption, Việt Nam can build resilience and ensure a sustainable economic future.” 

Road transport electrification

The report also highlights Việt Nam's efforts to carry out its transition to electric vehicles, which is a key step in creating a greener transport sector and reducing air pollution. 

A Hà Nội resident shops at Bic C Thăng Long supermarket. The World Bank says domestic business activities and services will be crucial for Việt Nam's economic growth this year. — VNA/VNS Photo Trần Việt

After pledging to decarbonise the economy by 2050 at the COP26 climate conference in Glasgow in 2021, in June 2022, Prime Minister Phạm Minh Chính approved Decision 876, which set targets to transition the road transport sector towards electromobility (e-mobility) through the use of electric vehicles (EVs).

According to the decision, 50 per cent of urban vehicles and 100 per cent of urban buses and taxis must be powered by electricity or other ‘green’ energy sources by 2030. Subsequently, 100 per cent of all road vehicles should be electrified by 2050.

To reach this goal, two-wheeled vehicles – or motorbikes – must be prioritised for electrification, according to Chiara Rogate, the WB’s senior energy specialist, a co-author of the report.

“Việt Nam is mostly dominated by two wheelers in terms of road vehicles,” she said. “So electrified two wheelers, even if right now they only account for 11 per cent of the overall vehicle stock, is still quite a significant contribution.”

According to the World Bank’s projection of vehicle sales in Việt Nam, from now until 2035, most of the growth in sales is expected to come from two wheelers, Rogate added. 

“It's only in 2035 that we are expecting a parity between those two wheelers and private cars, which stresses further the need for really accelerating the electrification of this means of transportation,” she said.

One 'easy, low-hanging fruit' for doing that is to have the motorbikes registered at the provincial and municipal levels to have a better assessment of the number of vehicles already on the road, and to what extent they are – or not – electrified, Rogate said.

To accelerate EV adoption in the two-wheeler segment, the Government should implement strong safety standards, incentivise the adoption of high-performance batteries, expand charging and battery-swapping stations and introduce affordable financing options, according to the report. 

To pave the way for large-scale EV adoption anticipated after 2035, Việt Nam needs to prepare its power system for increased electricity demand and establish a fast-charging network over the next decade, it says.

The transition to electric vehicles could reduce net carbon emissions in Việt Nam by 2.2 million tonnes by 2050, the report says. It can also create up to 6.5 million jobs by that year, particularly in battery manufacturing and charging infrastructure development. 

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