GDP Growth Beats Forecasts to Reach 7.1% in 2024
Vietnam’s Economy Exceeds Expectations with 7.6% YoY Growth in Q4 2024
According to Vietnam’s General Statistical Office, the nation has recorded a remarkable increase of 7.6% year-on-year (YoY) in the last quarter of 2024, capping off an impressive year of economic growth. Throughout 2024, Vietnam consistently surpassed expectations, with growth rates of 5.98% in the first quarter, 7.25% in the second, and 7.43% in the third quarter. Overall, the country’s GDP growth for the year achieved an impressive 7.1%, exceeding the National Assembly’s target of 6.5%.
Sectoral Contributions to Growth
Delving deeper into the growth dynamics, the industrial and construction sectors emerged as the key drivers, contributing approximately 45.2% to the added economic value. The service sector also played a significant role, accounting for 49.5%. Meanwhile, the agricultural, forestry, and fishery sectors recorded a more modest growth rate of 5.4%, even in the face of challenges such as natural disasters, notably Typhoon Yagi in September 2024.
The surge in industrial and manufacturing outputs can be attributed to robust government support and proactive policy measures aimed at fostering growth. Notably, key sub-sectors such as textiles, automotive production, and refined petroleum products demonstrated resilient performance, aided by initiatives like a 50% reduction in registration fees for the domestic automotive assembly industry.
Trade and tourism activities displayed high momentum as well. The wholesale and retail sector increased by 7.9%, transportation and warehousing rose by 10.8%, while finance, banking, and insurance activities grew by 7.1%. Accommodation and food services also saw a commendable increase of 9.8%.
Foreign Investment Landscape
Total foreign investment registered in Vietnam by the end of 2024 reached $38.2 billion, a slight decline of 3.0% compared to the previous year. Notably, manufacturing and processing led with $25.6 billion, followed by real estate at $6.3 billion. Major investments from 114 countries poured into Vietnam, with Singapore being the largest investor at $10.2 billion. Special mention goes to significant projects in semiconductors and renewable energy, signifying Vietnam’s economic transformation into a high-tech manufacturing hub.
Vietnam’s Exports Hit a New Record of US$405.53 Billion in 2024
Trade Surplus Expansion and Record High Trade Value
Vietnam’s total import and export value in 2024 soared to an estimated $786.07 billion, marking a 15.4% increase from the previous year, and resulting in a trade surplus of $24.8 billion.
In the fourth quarter alone, exports reached $105.9 billion, a remarkable 11.5% increase from the year prior. The total export turnover for 2024 reached $405.53 billion, a 14.3% rise compared to 2023. Moreover, 37 export categories achieved turnover exceeding $1 billion, contributing 94.3% to the total export value, with electronics and textiles leading the charge.
Driven by Global Demand
Vietnam’s export growth in 2024 was largely sustained by strong demand from major markets, including the U.S., EU, Japan, South Korea, and China. The United States solidified its position as Vietnam’s largest export partner, with significant demand for textiles, electronics, and agricultural products. A noteworthy shift in textile orders from Bangladesh to Vietnam further enhanced the country’s standing in global textile production.
Among the key export categories, electronics, computers, and components continued to dominate, driven by substantial contributions from global tech giants such as Samsung and LG.
- Textile and Garment Sector: The textile industry recorded impressive revenues of $44 billion, solidifying Vietnam as the second-largest textile exporter globally.
- Wood Products: Rebounding consumer demand in U.S. and European markets propelled wood exports to $16.25 billion, surpassing previous records.
- Agricultural Products: Agricultural exports remained significant, with primary markets in China, the U.S., the EU, and Japan.
US Tariff Threats and Opportunities for Vietnam
Emerging Trade Dynamics Under New Leadership
As former U.S. President Donald Trump returns to power, Vietnam—an increasingly pivotal manufacturing hub—stands to gain from heightened U.S.-China trade tensions. Trump’s proposed tariffs on Chinese imports could redirect numerous multinational corporations to consider Vietnam as an alternative manufacturing base.
The competitive labor costs, geographical advantage, and favorable trade agreements are luring investments toward Vietnam, with the trade surplus with the U.S. reportedly reaching a staggering $104.6 billion in 2024.
Potential Risks Ahead
Despite favorable trade dynamics, the expanding trade surplus raises concerns about Vietnam potentially becoming a target of new U.S. trade policy measures. The economic landscape suggests that increasing scrutiny may emerge, particularly as the U.S. addresses its trade deficits with both Mexico and Canada, along with Vietnam.
Government Strategies to Mitigate Risks
In anticipation of possible trade tensions, Vietnam’s government has begun initiatives to narrow the trade surplus with the U.S., including boosting imports of U.S. goods, particularly agricultural products. Discussions surrounding the potential purchase of U.S. liquefied natural gas have also been initiated.
Furthermore, Vietnam is focused on enhancing its competitive edge by implementing business-friendly policies and encouraging localization requirements for products being marketed as “Made in Vietnam.” This means that products need to demonstrate a certain level of domestic integration, which may complicate ongoing manufacturing processes reliant on imported components.
Implications for Businesses Operating in Vietnam
As trade tensions heat up, Vietnam emerges as a more attractive destination for companies diversifying their supply chains beyond China. However, the intricacies of the evolving trade landscape compel businesses to adapt their operations to remain competitive while safeguarding their interests.
Vietnam’s Strategic Initiatives Drive High-Tech Investment Boom
Enhancing Appeal to High-Tech Industries
2024 is marked as a turning point for Vietnam, which has actively sought to enhance its allure for high-tech industries through innovative government initiatives and strategic policies. These efforts have spurred substantial foreign investments, positioning the nation as a rising tech industry hub.
Government Support for High-Tech Investment
In December 2024, the Vietnamese government introduced Decree No. 182/2024/ND-CP, creating an Investment Support Fund aimed at bolstering high-tech sectors. This fund offers financial assistance covering up to 50% of initial investment costs for enterprises involved in research and development (R&D) within the semiconductor and AI industries.
Positive Outcomes of Proactive Policies
The implementation of these supportive policies has led to a significant influx of foreign direct investment (FDI) within Vietnam’s high-tech sector. For instance, in November 2024, Haiphong city attracted considerable investments, registering certificates for 12 new and expanded projects totaling $1.8 billion in capital. Prominent commitments include LG Display’s announcement of an additional $1 billion investment to enhance operations in Haiphong, thereby increasing production capacity.
With a collective investment exceeding $8 billion from LG alone, these initiatives underscore Vietnam’s commitment to establishing itself as a key player in the global high-tech landscape, fostering technological innovation and economic growth.
This impressive trajectory, alongside strategic planning and favorable policies, envisions a future where Vietnam not only thrives economically but also emerges as a leading player in the global technology arena.
About This Report
This report was compiled with contributions from business experts across ARC Group’s global offices. ARC Group specializes in advising Western companies operating in Asia and beyond, helping to bridge gaps between global business ecosystems and key markets. Our services encompass corporate strategy, business transformation, operations, sustainability, growth, sales & marketing, and digital & AI solutions across various industries.