Adapting and innovating in a dynamic global environment

	Solving necessary and urgent issues in financial and budgetary sectors
	Adapting to multicultural environments in global business

Dr. Nguyen Tri Hieu

How will the impacts on the economy in 2024 continue to affect 2025?

In 2024, the Vietnamese economy was significantly influenced by international developments. Conflicts like the one in Ukraine and the Middle East, along with unrest in other regions, such as the recent situations in South Korea and Syria, considerably impacted the global financial market. Additionally, the shift in US monetary policy as the Federal Reserve (Fed) transitioned from tightening to easing influenced Vietnam's exchange rate, stock market, and foreign exchange.

I believe these impacts will persist into 2025. A crucial factor is the political landscape in the US under President Donald Trump. His strong protectionist trade policies will present challenges for Vietnam, particularly regarding exports to the US market. We must carefully manage these risks while also capitalizing on opportunities from investment flows and production shifts from other countries to Vietnam.

What factors pose the greatest risks, and what opportunities can we leverage?

Four key "variables" will significantly impact the Vietnamese economy in 2025.

First, the USD exchange rate will remain a strong influence, particularly as the US potentially implements quantitative easing or monetary tightening depending on its budgetary situation. This could lead to the devaluation of the Vietnamese dong, impacting import costs and domestic inflation.

Second, regarding foreign trade, US protectionist trade policies, especially under Mr. Trump, could pose significant challenges for economies exporting to the US, including Vietnam. Vietnam currently has a large trade surplus with the US, and if the US imposes higher tariffs on Vietnamese goods, maintaining export turnover will be difficult.

However, opportunities exist for Vietnam to attract investment from US companies, particularly in high-tech and semiconductor sectors, especially as many US businesses relocate production from China. This could accelerate Vietnam's industrial modernization and create substantial employment opportunities. Furthermore, with higher US tariffs on Chinese goods, Vietnam could benefit from exporting to the US at lower rates.

Third, the ever-unpredictable and rapidly changing geopolitical landscape will influence the foreign policies of major countries, particularly the US. Vietnam's high degree of openness to international trade makes it directly susceptible to fluctuations from major powers like the US.

Fourth, domestic economic factors, where existing support policies may be insufficient for full business recovery, pose challenges.

How do you assess the impact of these factors on Vietnam's financial and monetary market in 2025?

The US economic situation and Fed policy will directly impact the VND/USD exchange rate, affecting foreign exchange and stock market activities.

Specifically, the Fed's continued easing or tightening of monetary policy will alter global investment flows, impacting Vietnam's ability to attract FDI and indirect investment into its stock market.

The Vietnamese dong is projected to depreciate by around 5% in 2024. In 2025, the exchange rate will remain influenced by Mr. Trump's economic policies. If the USD continues to strengthen, the Vietnamese stock market may face difficulties. Furthermore, exporting businesses with foreign currency debt will face higher exchange rate risks, impacting profits and investor sentiment.

Geopolitical fluctuations have influenced global gold prices, impacting Vietnam's gold market. However, due to limited integration with the global market, the impact on domestic gold prices has been less severe.

What solutions should Vietnam implement to maintain growth and sustainable development in the face of these challenges?

In 2025, Vietnam needs long-term and flexible strategies. Prioritizing macroeconomic stability, especially controlling exchange rates and inflation, is crucial. The SBV's monetary policy will play a key role in regulating the exchange rate and supporting the economy.

Vietnam needs to accelerate economic reforms, restructuring, and improve labor productivity. Industrial modernization, particularly in high-tech and semiconductor sectors, will enhance export value. Simultaneously, improving product quality to meet the demands of discerning markets is essential.

Vietnam needs to proactively diversify its trade relationships, reducing reliance on any single market. Increased cooperation with ASEAN partners, Europe, and emerging economies will mitigate risks from global fluctuations.

As the philosopher Heraclitus said, "Change is the only constant in life." Vietnam must adapt quickly and continuously innovate to capitalize on opportunities in an ever-changing world.

Thank you!