Experts point out economic growth drivers, challenges for next year

A technician monitors solar module production at Trina Solar Energy Development Co Ltd in Thái Nguyên Province. Businesses are encouraged to use state-of-the-art technology to improve productivity, which will be one of the main economic growth drivers for next year. — VNA/VNS Photo Trần Việt

With the current global political and economic instability, economic experts predict that Việt Nam's economy will be somewhat affected in 2025, although there has been positive growth this year and some growth drivers will remain strong.

The country has set a goal for a GDP growth of 6.5-7 per cent next year, working towards 7-7.5 per cent. In the long term, the Government is determined to achieve double-digit growth rate once the economic 'bottlenecks' have been addressed.

"There is little doubt about the double-digit GDP growth. The key solution is to improve the operational efficiency of businesses," Lương Văn Khôi, deputy director of the Central Institute for Economic Management (CIEM), said.

Speaking about the country's current 7 per cent GDP growth, Khôi said it was a significant breakthrough that showed that the economy was strongly recovering after the pandemic.

"Compared to other ASEAN countries, according to the International Monetary Fund's forecast in October 2024, Việt Nam is expected to have the highest growth rate in the region," he said.

Domestically, growth drivers have come from several factors, including controlled inflation, stable growth across all three economic sectors (agriculture, industry and services), improved living standards, a strong recovery in tourism and exports, as well as positive growth in foreign direct investment (FDI), according to Khôi.

“Despite the complex and unpredictable geopolitical situation, Việt Nam has remained a market linked to 16 free trade agreements, and global demand for Việt Nam's goods has increased,” Khôi said.

However, the economic expert also pointed out some drawbacks, one of them being the decreased GDP contributions from leading economic regions such as Hà Nội, HCM City, and the provinces of Bình Dương, Đồng Nai and Bà Rịa Vũng Tàu.

"The reasons stem from internal factors within businesses such as workforce quality and management, and external factors like the business investment environment, global market shocks and Việt Nam's response to these shocks," Khôi said.

"Industrial sectors are still mainly engaged in outsourcing, so the value generated is low. If the efficiency of businesses can be improved, Việt Nam could achieve double-digit growth, and there would be no major difficulties in doing so."

Growth drivers for 2025

Apart from key factors such as controlled inflation, stable growth in the three economic sectors and increasing FDI, Khôi said the growth drivers for 2025 would also come from improved transport infrastructure and new regulations that facilitate economic development.

Increasing business productivity by using technology and artificial intelligence (AI) would also drive growth, he added.

Barry Weiblatt David, director of the Analysis Division at VNDIRECT Securities Corporation, said he expected Việt Nam’s GDP growth in 2025 to reach 6.9 per cent. If public investment disbursement reaches 100 per cent, GDP growth could surpass 8, or even 9 per cent.

Foreign investment might significantly increase as Việt Nam’s stock market was set to be upgraded to an emerging market, David said. If Việt Nam’s credit rating improves, borrowing costs could decrease by up to 2 per cent, which would be a positive factor for attracting foreign capital for development plans.

“With the catalyst from expectations of GDP growth, public investment, and market upgrades, Việt Nam’s stock market is set for positive growth in 2025,” he said.

The director of Customer Behaviour Research at NielsenIQ Vietnam, Đặng Thúy Hà, pointed out from recent research that 67 per cent of Vietnamese people believed their financial situation would improve, a notable increase compared to 50 per cent in the previous year’s survey. More people said they were spending outside their homes, although cautiously.

“This indicates a positive recovery in the retail and consumer sector in 2025, especially in the food and beverage industry,” Hà said.

In terms of the real estate market, according to Nguyễn Văn Đính, president of the Vietnam Real Estate Brokerage Association (VARS), after a year of strong transformation, significant breakthroughs are expected in 2025, supported by favourable credit packages and the implementation of several new laws.

Year-end shopping at a supermarket in Hà Nội. The retail sector is expected to see positive growth next year. — VNS Photo Lê Mai Hương

Four major challenges

Despite the potential for growth, Nguyễn Trí Hiếu, Ph.D, an independent financial expert and director of a research institute on the financial and real estate markets, pointed out four major challenges that Việt Nam's economy would likely face next year, which are exchange rates, foreign trade, geopolitical tensions and internal economic conditions.

Concerning exchange rate, as of December 9, the US dollar index reached 105.69, showing a significant increase compared to previous periods. The Vietnamese đồng (VND) has risen to VNĐ24,265 per 1 US dollar (USD), up 4.34 per cent from the beginning of the year.

With this trend, by the end of this year, the đồng is expected to depreciate by around 5 per cent against the dollar. The VND/USD exchange rate will continue to be influenced by economic policies under President-elect Donald Trump’s leadership.

“In 2025, the US may shift its current loose policies back to tightening if inflation risks reemerge due to rising import prices from new tariffs, and bond yields remain high. This will put pressure on the VND/USD exchange rate,” Hiếu said.

Trump may also impose high import tariffs on countries with trade surpluses with the US, including Việt Nam, one of the top 10 trade surplus countries. This creates risks for Việt Nam’s exports to the US if the Trump administration implements protectionist trade policies, according to Hiếu.

Regarding geopolitical tensions, troubles between Russia and Ukraine, in the Middle East and the Korean Peninsula will create unpredictable shifts impacting the global and Vietnamese economy.

“Việt Nam is a key link in this turmoil and its policies must adapt to these changes,” Hiếu said. “With the dependence on foreign trade with the US and the fact that around 80-90 per cent of foreign trade transactions are in US dollars, Việt Nam will be affected by USD fluctuations and US economic and foreign policies.”

As for internal economic conditions, while optimistic growth forecasts have been made, many businesses – especially small and medium-sized enterprises (SMEs) – will continue to face challenges and not have access to sufficient government support. Without effective assistance, the number of businesses exiting the market in 2025 is expected to rise, according to Hiếu.