Vietnam Growth Seen Steady Despite Robust Q1

The World Bank retains its 5.5% GDP growth projection for Vietnam in 2024, unchanged from its October 2023 forecast.

This comes despite a robust Q1 performance, with growth hitting a five-year high of 5.66%. Vietnam's expansion trails regional rivals like Cambodia and the Philippines but surpasses the East Asia & Pacific average of 4.5%.

While the World Bank's outlook remains steady, other analysts predict acceleration. Standard Chartered sees 6.7% growth in 2024, while HSBC anticipates a return to the 6% trend rate. VinaCapital projects a range of 6-6.5%, aligning with the United Nations' forecast.

The World Bank notes that Vietnam, along with China, has recently cut interest rates in response to weak domestic demand and stress in the corporate sector. This contrasts with rate hikes elsewhere in the region to combat inflation.

It highlights Vietnam's strong public investment record, which has supported growth and exceeded pre-pandemic levels in GDP share. The country's per capita output has not only surpassed the pre-pandemic level but currently stands 15% higher.

Crucially, the report emphasizes the link between services sector liberalization and productivity gains for both services providers and downstream manufacturing. Vietnam's entry into the WTO in 2007 spurred progress in this area, leading to measurable productivity increases.