2024 was a year of significant fluctuations for Vietnam’s economy. Challenges such as weak consumer demand, sluggish real estate recovery, and corporate bond debt pressures loomed large. However, strong export growth and the arrival of billion-dollar investors offered optimistic prospects.
Navigating a challenging year
Vietnam’s economy in 2024 showcased robust growth, potentially exceeding 7%, maintaining its lead among the ASEAN-6 economies.
This result came as no surprise to international investors, who view Vietnam as a rising star in Asia. However, domestic investors, facing numerous hurdles, might find the achievement remarkable.
The private sector’s investment and production activities showed limited vibrancy. Public investment was sluggish, and the real estate market remained stagnant, with businesses grappling with heavy debt burdens, particularly from bonds.
The foreign exchange rate posed additional challenges, with USD/VND reaching 25,000 by March and climbing to over 25,500 by November, up 4.4% from the start of the year. This created pressure on monetary policy as the central bank sought to support economic growth.
Credit growth was negative during the year’s initial months but recovered by March, showing a 0.26% increase compared to the end of 2023. This was attributed to government support measures.
The real estate sector saw localized surges in auction activity, particularly in Hanoi. However, overall transactions remained subdued, with inflated pricing and ongoing financial struggles for real estate enterprises.
Corporate bond maturity pressure was significant. According to Mirae Asset Securities, December alone saw 39 trillion VND ($1.62 billion) in maturing bonds, including 7 trillion VND from real estate companies. VIS Ratings reported 189 trillion VND ($7.85 billion) in overdue bonds between April 2022 and November 2024.
Consumer spending also weakened. Total retail sales for 11 months reached 5.8 quadrillion VND ($241 billion), a modest 8.8% year-on-year increase, and only 5.8% when adjusted for inflation.
Stock market performance reflected low investment inflows, with the VN-Index hovering around 1,200 points throughout the year, a level first set in 2006. Foreign investors recorded net sales of $3.1 billion, the highest in history.
The gold market saw volatile pricing, with local gold sometimes trading 18-20 million VND ($750-$830) higher than global rates. The State Bank of Vietnam’s measures reduced this disparity, but trading activity remained muted.
Promising signs of growth
Despite challenges, Vietnam demonstrated strong economic growth, with bright prospects for 2025.
Major international organizations like the Asian Development Bank (ADB) and UOB upgraded Vietnam’s GDP growth forecasts for 2024 to 6.4%, with 2025 projections reaching 6.6%. Vietnam set its own ambitious targets: 6.5-7% growth in 2024 and 7-7.5% by 2025.
The most significant developments came in December. NVIDIA, under CEO Jensen Huang, announced the establishment of its third global AI research center in Vietnam, alongside facilities in the U.S. and Taiwan. Google also revealed plans to expand operations in Vietnam.
Huang described Vietnam as NVIDIA’s "second home," emphasizing its unique advantages.
Apple supplier Foxconn committed $80 million to chip production in Bac Giang province, while Meta outlined plans to expand its virtual reality equipment production. Elon Musk’s SpaceX is reportedly planning a $1.5 billion investment, while Trump Organization announced a similar-sized project in Hung Yen province.
Foreign direct investment (FDI) inflows remained strong, with Vietnam ranking among the top 15 developing countries attracting FDI, securing $31 billion in the first 11 months of 2024.
Vietnam’s long-term economic outlook is bolstered by its numerous free trade agreements (FTAs) and its emerging role as a global semiconductor hub. Oxford Economics predicts Vietnam will increasingly contribute to the global chip industry while reducing reliance on real estate development.
Infrastructure improvements, including the completion of the 500kV transmission line and progress on the North-South high-speed railway, further support Vietnam’s growth trajectory. For the first time, a Vietnamese electric vehicle manufacturer claimed the top spot in the domestic automotive market.
Manh Ha
Vietnamnet.vn
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