Việt Nam enjoys robust recovery amidst global challenges

Việt Nam enjoys robust recovery amidst global challenges

Both the IMF and OECD believe that with solid macroeconomic fundamentals, a clear reform agenda, and active involvement from the private sector, Vietnam is well-positioned to maintain stable growth and enhance its position in global value chains.

A production line of camera modules and electronic components for export at the factory of MCNEX VINA Co., Ltd of the Republic of Korea in Phúc Sơn Industrial Park, Ninh Bình province. — VNA/VNS Photo

The Vietnamese economy is demonstrating remarkable recovery amidst global turbulence, earning positive endorsements from major international organisations like the Intenrational Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), World Economic Forum (WEF), and Singapore-based United Overseas Bank (UOB).

However, proactive adaptation and strong reform will be the keys for the Southeast Asian country to maintain its sustainable economic growth as external challenges intensify, they suggested.

Strong growth trajectory captures international attention

Việt Nam kicked off 2025 with GDP growth of 6.93 per cent in Quarter 1, building on 2024's stellar 7.09 per cent expansion. These figures reflected the country's flexible economic management and adaptability in navigating external headwinds.

At a meeting with Prime Minister Phạm Minh Chính on the sidelines of the 16th Annual Meeting of WEF in China’s Tianjin city, WEF Interim Chairman Peter Brabeck-Letmathe affirmed Việt Nam’s increasingly prominent role in global economic networks. He stressed how its flexible management ability and independent foreign policy have created powerful magnetism for international business communities.

The Memorandum of Understanding signed with WEF in Tianjin in 2023 contributed to connecting Việt Nam with multiple global corporations, providing the country with various opportunities to lure high-quality foreign investments, he said.

WEF President and CEO Borge Brende shared this optimism, praising Việt Nam's ambitious double-digit growth targets for the coming decade, which are possible if current momentum continues.

The OECD, in its Việt Nam 2025 report released mid-June, recognised the country’s significant long-term progress. Chief economist Alvaro Pereira expressed confidence that Việt Nam could achieve high-income status by 2045 or even sooner with sustained reform efforts and integration.

From the perspective of the private economic sector, the UOB identified clear signals of recovery in Việt Nam's economy in the second quarter. Their latest forecast projected Q2 GDP growth at 6.1 per cent, bolstered by US tax policy deferrals and proactive responses from the Vietnamese Government and businesses. According to UOB surveys, 60 per cent of Vietnamese enterprises are optimistic about their growth prospects over the next year, and nearly half are planning to expand into international markets.

External risks on the horizon

Despite positive growth indicators, Việt Nam's economy currently faces significant challenges, particularly from external factors. The IMF warns that Việt Nam's growth outlook remains heavily reliant on the outcomes of trade negotiations, while global uncertainty remains high.

A production line of camera modules and electronic components for export at the factory of MCNEX VINA Co., Ltd of the Republic of Korea in Phúc Sơn Industrial Park, Ninh Bình province. — VNA/VNS Photo

The Head of the IMF mission to Việt Nam, Paulo Medas, noted that escalating trade tensions will pose significant hurdles to exporters, and domestic financial pressure may intensify due to tightening credit conditions and high corporate debt levels.

Both UOB and IMF mentioned the US trade policy, with the April announcement of reciprocal tariffs of 46 per cent on several Vietnamese exports having triggered concerns across the global market. However, the American country subsequently delayed its implementation for 90 days for negotiation time. According to the UOB, Vietnamese exports heavily depend on key sectors including electronics, furniture, textiles, and footwear, which comprise approximately 80 per cent of export value to the US; therefore, any trade policy changes could leave substantial impacts.

Proactive adaptability, reforms seen as foundation stones

Against the backdrop of multiple risks, international organisations have recognised Việt Nam’s efforts in maintaining its macro-economy and promoting reforms. The IMF held that fiscal policy plays a leading role in economic management, particularly in the context of Việt Nam’s low public debt levels. Accelerating public investment timelines and expanding social safety networks will boost short-term growth.

The IMF suggested Việt Nam focus on stabilising inflation expectations while allowing greater exchange rate flexibility to adapt to external shocks. Simultaneously, modernising monetary management frameworks by replacing credit growth ceilings with prudential policy frameworks will enhance management effectiveness.

The OECD, in the meantime, underscored the significance of institutional reform, including expanding the tax base, improving social welfare systems, and promoting renewable energy. Attracting high-quality FDI must accompany enhanced domestic capacity building, intellectual property protection, and human resources development.

The bank reported that 80 per cent of surveyed export-oriented enterprises have proactively addressed tariff risks through multiple solutions, including supply chain diversification, increased localisation, and investments in digitalisation and sustainable development. Many companies are targeting ASEAN and European markets as potential destinations to reduce dependence on traditional markets.

Despite experiencing short-term fluctuations, international organisations are optimistic about Việt Nam's medium- and long-term prospects. Both the IMF and OECD believe that with solid macro-economic fundamentals, a clear reform agenda, and active involvement from the private sector, Việt Nam is well-positioned to maintain stable growth and enhance its position in global value chains.

UOB forecasts Việt Nam's GDP growth at 6 per cent for 2025 and 6.3 per cent in the following year. Since the global economy is turbulent, maintaining reforms, enhancing productivity, and strengthening competitiveness will enable Việt Nam to seize opportunities for breakthrough development. 

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