Image Credits - Bloomberg
Vietnam has set an ambitious economic growth target of 6.5% for 2024, as detailed in the Annual Economic Report 2024. However, local media on Friday highlighted significant challenges that could hinder the country from achieving this goal. The report underscores a range of economic hurdles, including global uncertainties, domestic market pressures, and shifting trade dynamics that could complicate Vietnam’s growth prospects.
The 6.5% growth target reflects Vietnam’s aspirations to continue its trajectory of rapid economic development and to further solidify its position as a rising star in the Asia-Pacific region. Over the past decade, Vietnam has experienced robust economic expansion, driven by strong manufacturing, increased foreign direct investment (FDI), and a growing consumer market. However, the path to achieving this growth rate in 2024 is fraught with potential obstacles.
One of the primary challenges highlighted in the report is the uncertainty surrounding the global economic landscape. The lingering impacts of the COVID-19 pandemic, coupled with geopolitical tensions and supply chain disruptions, continue to pose risks to global trade and investment flows. These factors are critical for Vietnam, which heavily relies on export-oriented industries and foreign investments to drive its economic growth.
The report also points to internal economic pressures, such as inflation and the need for structural reforms. Inflationary pressures could erode consumer purchasing power and increase the cost of doing business, potentially dampening economic activity. Additionally, the Vietnamese government faces the ongoing challenge of implementing structural reforms to enhance productivity and competitiveness. This includes improving infrastructure, streamlining regulatory processes, and fostering innovation to sustain long-term growth.
Another significant factor is the evolving dynamics of international trade. Vietnam’s economy is deeply integrated into the global supply chain, and any shifts in trade policies or tariffs, particularly from major trading partners like the United States and China, could impact its export performance. The report emphasizes the need for Vietnam to diversify its export markets and reduce dependence on any single economy to mitigate risks associated with trade volatility.