At the announcement of the leading annual economic publication of the Asian Development Bank (ADB) on April 9, the representative of this unit assessed that in the past, strong trade, recovery of export production and abundant foreign direct investment (FDI) have boosted Vietnam's GDP growth in 2024.
However, according to ADB experts, global instability and legal barriers are still significant downside risks this year. However, growth is expected to remain solid in the next two years with slightly increased inflation. Extensive institutional reform is expected to improve government efficiency and boost growth.
The important policy challenge is to increase Vietnam's added value in the global supply chain. This helps make better use of economic linkages, especially in the context of current global trade tensions and other economic disruptions.
Although maintaining a positive outlook for Vietnam this year and next year, the Asia Development perspective report for April 2025 also highlights the risks to growth prospects - as these forecasts are calculated before the US announces tariffs.
ADB National Director in Vietnam - Mr. Shantanu Chakraborty commented that strong trade growth, production for exports recovered positively and high foreign direct investment have boosted Vietnam's economic growth in 2024. However, the recent announcement of the US tax, along with ongoing global instability, could pose significant challenges for Vietnam's growth this year.
The changing global economic environment, significantly affected by recent US tax declarations and geopolitical tensions, poses major challenges for economies that rely on growth for exports, according to Shantanu Chakraborty.
External instability such as tariff escalation, retaliatory measures, the prolonged conflict between Russia and Ukraine and ongoing instability in the Middle East could hinder global economic growth in the short and medium term. In addition, slowing growth in the US and China, Vietnam's major trading partners, could further affect Vietnam's economic prospects.
The Vietnamese government has set a plan to achieve ambitious growth targets, which can significantly reduce external risks. Economic growth can be achieved higher and more sustainably if the recent comprehensive institutional reform efforts are implemented quickly and effectively. These reforms will stimulate domestic demand, increase the effectiveness of state management in the short term, thereby promoting the development of the private sector in the medium and long term" - Mr. Chakraborty said.
According to ADB experts, increasing Vietnam's participation in global supply chains is a key policy challenge for the country's development. As global economic drivers change, Vietnam's advantages in increasing added value in global supply chains also change.
"Appealing the limitations and challenges related to expanding Vietnam's participation and enhancing added value in global supply chains is very important to improve the country's economic development roadmap and long-term growth potential" - ADB recommended.
