Vietnam’s Economic Performance: H1 2024 Overview
Vietnam’s economic landscape in the first half of 2024 has demonstrated resilience, reinforcing the government’s expectations for a growth rate of 6-6.5% for the year. The General Statistics Office (GSO) reported a year-on-year GDP growth of 6.42%, slightly below the 6.58% reported in the same period of 2022. This performance is attributed to the robustness of the global economy amid prevailing uncertainties.
GDP and Growth Projections for 2024
Prominent financial institutions, including the United Overseas Bank (UOB), the Asian Development Bank, and Standard Chartered, have set Vietnam’s growth forecast at 6% for 2024. The International Monetary Fund (IMF) reported a solid rebound in Vietnam’s economy, registering a 6.4% growth in H1.
The ASEAN+3 regional outlook report by AMRO revised its GDP growth forecast for Vietnam upward to 6.3% from 6% earlier. The Deputy Minister of Planning and Investment stated that registered foreign direct investment (FDI) is anticipated to reach an impressive US$40 billion this year. The Central Institute for Economic Management (CIEM) noted that real GDP growth has exceeded potential for four consecutive quarters.
Investments Landscape
Foreign Direct Investment (FDI)
Vietnam has welcomed nearly US$15.2 billion in FDI during the first half of 2024, a 13.1% increase compared to previous years. As of late June, foreign investors had registered about US$9.54 billion across 1,538 new projects—indicating a 47% rise in capital and a 19% increase in project numbers.
During the same period, disbursed capital reached US$10.842 billion, marking an 8.2% annual increase—the highest in five years. Singapore remains at the forefront of foreign investment, contributing approximately US$5.579 billion.
Public Investments
Despite a general increase in FDI, the public investment arena has faced stagnation. Many allocated funds remain unspent, posing challenges as total public investment resources for 2024 have decreased compared to last year.
Trade Highlights
In H1 2024, Vietnam’s export revenues reached US$190.08 billion, a 14.5% year-on-year increase, while imports rose 17% to US$178.45 billion. This resulted in a trade surplus of US$11.63 billion, which is lower than the US$13.4 billion recorded in H1 2023.
The FDI sector led exports, with revenues of US$136.69 billion—up 12.3% year-over-year—while the domestic sector reported a notable trade deficit of US$12.35 billion.
Key Trade Partners
China remains Vietnam’s largest trading partner, with a total trade value of US$94.8 billion in the first half of 2024. The United States followed closely at US$61.4 billion. Notably, exports to the U.S. increased by 22.1% year-over-year, signaling robust trade relations.
Industrial Performance and Employment Trends
The added value of industrial production grew by 7.54% compared to last year, driven primarily by the manufacturing and processing sectors. The S&P Global Vietnam Manufacturing Purchasing Manager’s Index (PMI) rose to 54.7 in June 2024, indicating improved business conditions.
The GSO also reported a stable unemployment rate of 2.27% in H1 2024. The workforce aged 15 and above stood at about 52.5 million, with a notable presence in the service sectors.
Labor Income
The average monthly income for contracted workers reached VND7.5 million (approximately US$295), showing a year-on-year increase. Males earned an average of VND8.5 million, while females earned about VND6.4 million.
Inflation Insights
Vietnam’s inflation rate has emerged as a significant concern, with core inflation rising by 2.75% and the average Consumer Price Index (CPI) increasing by 4.08% in H1 2024. This inflation trend has surpassed the annual target range, raising alarms among economists.
Expected upward pressures on inflation are attributed to supply fluctuations, global price volatility, and seasonal demand increases, particularly in electricity and services.
Business Considerations Moving Forward
Despite the positive performance, latent risks lurk in Vietnam’s economic future. Experts highlight potential currency depreciation and rising public wages as pressing concerns. Ongoing challenges include issues in the business environment, capital access constraints, and rising input costs.
Businesses are encouraged to actively monitor production conditions, strengthen linkages between production and distribution, and innovate trade strategies to navigate these challenges effectively. Additionally, the National Assembly’s extension of a 2% reduction in VAT until the end of 2024 aims to bolster consumer spending.
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