As per the latest IMF reports real Gross Domestic Product(GDP) of Vietnam in 2023 is estimated at 6.2 percent. This clearly shows that Vietnam has been avoiding the usual recessionary trends across the Asian markets and is showing better than average growth .With inflation rate being less than 4 per cent, it clearly shows that Vietnam is likely to emerge as a promising economy in Asia. According to the regional economic outlook which has been released by the IMF , it clearly projects that there are high expectations of uncharacteristic slow down in China benefitting competitors such as Vietnam, Philippines and Indonesia .
Asian Development Bank(ADB) has forecasted that Vietnam’s GDP was expected to grow by 6.5% in 2022 and nearly 6.7% forecasted for the year 2023. If one looks into the comparative forecast for countries in Southeast Asia it is stated that Philippines will grow by 6.3 per cent ,Cambodia 6.2 per cent ,Indonesia 5 per cent, Thailand 4.2 per cent , Laos 3.5 per cent ,and so on. If one looks into the core fundamentals of Vietnam following the COVID-19 pandemic, it has been clearly stated that Vietnam’s annual economic growth rate hovered between 6.3 per cent to 6.5 per cent for the decade preceding the current one.
One of the major aspects of this better than average economic growth was high foreign direct investment, increased domestic consumption, sizeable increase in the middle class, and Vietnam’s focus on promoting its manufacturing to be export oriented. In terms of other critical aspects Vietnam has been securing loans from many other international agencies over the past few years. With funding and grants from different international economic agencies ,Vietnam has been able to upgrade its road, rail transport and border connectivity infrastructure along with promoting social economic growth of nearly 243,000 people across the provinces.
One of the mainstays of Vietnam economy has been small and medium enterprises along with active participation of women.These enterprises have been getting bank credit and technical assistance through different initiatives such as public private partnerships, promotion of private sector development, and extensive reforms in state owned enterprises. Vietnam has been preparing well for facing the severity of climate change and also undertaking pilot projects for post disaster reconstruction and rehabilitation. It has institutional arrangements with World bank and Netherlands to develop resilience for the coastal areas particularly Mekong delta to undertake comprehensive efforts in mitigating the climate change effects.
Over a period of time Vietnam has been making serious efforts in emerging as a knowledge network society. This includes improving policy applications, enhancing capacities of stakeholders and providing information to the communities on a regular basis. Vietnam has also received more than USD $ 2 million grant for climate resilient inclusive infrastructure through high technology fund from ADB. In terms of meeting UN sustainable development goals, Vietnam has successfully provided electricity to its cent percent population.
It has been stated that Vietnam is one of the economies which is going to benefit from Regional Comprehensive Economic Partnership(RCEP) given the reduction in tariffs during the period 2020 to 2035 and because of these reductions the export of electrical equipment and machinery from Vietnam is going to grow to the level of 12.1% while the main stay of its exports primarily textiles and apparels are going to grow by nearly 10%. Given the fact that RCEP would facilitate Vietnam’s entry into high end markets such as Japan, Australia and New Zealand might translate into better trade revenues.
In fact better integration with regional economies would promote its sectors such as tourism, entertainment, education, agriculture, automobile telecommunication, and IT. Two different aspects have gained international attention because of Vietnam ranked 70th out of 190 countries in terms of ease of doing business, and its major strength has been the young population as nearly 70 per cent of its population is aged between 15 to 64. This large working population reduces social security liabilities to the aging population. Major work which has been done by the current Vietnamese government is its national strategy for Environmental Protection 2030 with a comprehensive plan under Vision 2050.
It is expected that Vietnam’s construction sector is going to grow because of increase spending on infrastructure projects along with improvement in regional connectivity through rail, road, and air transport infrastructure. There are high expectations that Vietnam tourism sector will post impressive recovery, and last year the country witnessed an increase of tourist arrivals by more than 185 per cent in the first four months of 2022. The tourism sector is going to increase further given the fact that Vietnam has signed a comprehensive agreement in boosting sustainable tourism and post COVID recovery at the national level. During the period 2022 to 2025 it is expected that the cumulative average growth rate of tourism would be 13.5% average each year .
As per the global data set and the General Statistical Office of Vietnam, the industrial production is also going to increase substantially and export orders as well as internal domestic demand is going to bring about remarkable improvement in production as well as exports. Last year, the G7 countries have agreed to grant a loan of US $5.5 billion for helping Vietnam transition from coal to other sources for power generation. This was based on the promise that Vietnam should make plans for shifting to nearly 50 per cent of its power requirements from renewable energy by the year 2030. It is also expected that foreign direct investment in Vietnam is going to be steady with high tech industries, knowledge based service industries, and education gaining the maximum investments. The real estate and construction sector are other sectors which are going to gain international attention.
This year it is expected that public investment would be helpful in post pandemic recovery and under the Socio Economic Recovery and Development Programme nearly US $15.4 billion has been approved for accelerating the economic growth. Furthermore, commodity exports is likely to see a remarkable two digit jump and the FTAs that Vietnam has signed with various partners will help in building the capacities of Vietnamese manufacturing sector in product transformation, exploring diversified markets, better restructuring, and skill development at different levels. The transformation is also happening in terms of fiscal and monetary prudence as well as undertaking reforms within banking system and financial governance. The anti corruption drive that the Vietnam has undertaken in the last few years have built the investor confidence and it is expected that Vietnam will reap the dividends of better business environment, market connectivity, and relatively comparative advantage among other competitors in Southeast Asia. As expected the fundamentals are getting stronger, and therefore Vietnam can witness a stronger economic growth and better macroeconomic stability in the year 2023.