Vietnam's market advantage: Investment opportunities in a new context

DNHN - Balancing interests, striving for a 7.5% GDP growth, enhancing international cooperation, promoting technological innovation, and developing appropriate foreign policies are the "keys" for the nation and businesses to overcome challenges.

2024: Vietnam maintains economic stability

By the end of 2024, Vietnam's GDP growth reached 7.06%, exceeding the National Assembly's target of 6-6.5%. The economy's scale hit $460 billion, a nearly 7% increase from $430 billion in 2023, according to IMF estimates. Vietnam's GDP per capita in 2024 reached $4,650, an increase of $300 compared to 2023.

Lending rates decreased by 0.76% from 2023, with approximately VND 2,000 trillion injected into the economy, reflecting a 15% credit growth, bringing the total outstanding loans of the economy to about VND 15.5 trillion by the end of 2024. The consumer price index (CPI) rose by 3.63% year-over-year, meeting the National Assembly's target of below 4.5%.

Supported by macroeconomic factors, the trade balance recorded a surplus of $25 billion, marking the ninth consecutive year of significant export surplus, bringing the total import-export turnover in 2024 to a record $783 billion, a 15% increase from the previous year, according to the Ministry of Industry and Trade. Exports were estimated at $403 billion, nearly 14% higher than in 2023, with notable contributions from agricultural, forestry, and fishery exports ($62 billion) and textiles ($43.5 billion).

Foreign investment continued to pour into Vietnam, with total newly registered, adjusted capital, equity contributions, and share purchases reaching $38.2 billion, representing 8.3% of GDP. Fifteen American companies invested over $8 billion in Vietnam.

The stock market continued to attract investor capital, adding 1.8 million accounts, reaching 9.15 million accounts, equivalent to 9% of the population. Market capitalization rose to 69.3% of GDP, equivalent to VND 7,085 trillion, a 19.3% increase from the end of 2023. Market liquidity averaged VND 21,225 billion per session, up 20.7% year-over-year.

2025: Continued opportunities for export growth

Global economic prospects for 2025 are expected to maintain growth despite facing numerous risks. The International Monetary Fund (IMF) forecasts global economic growth at 3.2%, the same as in 2024. Both the World Bank (WB) and the United Nations (UN) project global economic growth to be 0.1 percentage points higher than in 2024, at 2.7% and 2.8%, respectively.

For Southeast Asia, the Asian Development Bank (ADB) forecasts a 4.7% growth rate for 2025, consistent with 2024.

Nevertheless, 2025 poses significant risks and uncertainties. The U.S. Federal Reserve maintains its current policy rate between 4.25%-4.5%, with no signs of easing monetary policy, and is expected to reduce rates by only 0.25 percentage points in 2025. Notably, major macroeconomic policy changes, including taxes, trade barriers, and currency policies from U.S. President Donald Trump's administration, will impact the global and Vietnamese economies.

Although the Middle East crisis is being contained, U.S. tariffs and energy policies will influence oil prices. New regulations on sustainable development, such as the Carbon Adjustment Mechanism and the European Union's Anti-Deforestation Regulation, are creating trade barriers.

Global trade risks are significant. According to Hồ Nhật Quang, Investment Director of Thiên Việt Asset Management (TVAM), political instability, wars, or internal conflicts in the region could disrupt energy supply chains, drive oil prices higher, and elevate global production costs. Current indicators suggest a worrying likelihood of a Middle East crisis in 2025.

In recent years, escalating trade tensions between major powers like the U.S. and China have spurred a wave of trade protectionism. Post-COVID-19 sentiments have further amplified the preference for domestic supply chains, leading to tariff pressures and import restrictions, raising production and trade costs, diminishing the efficacy of free trade and international cooperation.

With the advantage of 18 signed FTAs, significant opportunities lie in expanding export markets to potential regions when the Vietnam-UAE Comprehensive Economic Partnership Agreement (CEPA) comes into effect in 2025. The Ministry of Industry and Trade aims for a 12% export growth compared to 2024.

Recognizing the opportunities in 2025, the Vietnamese government plans a GDP growth rate of 7%-7.5%; GDP per capita of approximately $4,900; an average CPI growth rate of about 4.5%; a breakthrough in disbursing at least 95% of public investment capital; and achieving the target of 3,000 kilometers of expressways by the end of 2025.

Vietnamese consumer spending in 2025 is expected to recover modestly due to income impacts from global and domestic economic risks.

Nonetheless, this is also a time for countries and businesses to act. Strengthening international cooperation, promoting technological innovation, and developing appropriate foreign policies will be the "keys" to overcoming challenges, laying a solid foundation for sustainable and stable development in an increasingly volatile global trade environment.

Ai Minh