Vietnam's Economy Rises in Q1 2024 Amid Manufacturing Surge

Vietnam's economy exhibited remarkable strength in the first quarter of 2024, recording a GDP growth rate of 5.66% year-on-year.

This impressive performance surpassed the nation's growth rates in the first quarters of 2020-2023, signaling an economic recovery amidst global challenges. Driving this surge were the flourishing manufacturing sector and a remarkable resurgence in tourism.

Manufacturing Might

The manufacturing and processing industries emerged as the growth engines of Vietnam's economy, expanding by a remarkable 6.98% and contributing 1.73 percentage points to the overall GDP increase. This stellar performance can be attributed to several factors, including rising domestic consumption, increased foreign investment, and burgeoning export demand.

The industrial production index painted a vivid picture of this manufacturing boom, with 54 out of 63 provinces reporting year-on-year increases. Furthermore, the inventory index for the manufacturing sector soared by 14.1% compared to the same period last year, reflecting robust demand for goods.

The consumption index of the entire processing and manufacturing industry in the first quarter of 2024 increased by 8.2% compared to the same period in 2023, highlighting the sector's robust performance.

Tourism Resurgence

After years of pandemic-induced struggles, Vietnam's tourism industry staged a remarkable comeback, contributing significantly to the nation's economic resurgence. International visitor arrivals soared 72% compared to the same period last year, even surpassing pre-pandemic levels by 3.2%.

Trade Surplus and Export Strength

Vietnam's trade performance further bolstered the nation's economic fortunes, with total import and export turnover reaching $178.04 billion, a 15.5% year-on-year increase. Exports surged by an impressive 17%, driven by robust demand for Vietnamese goods, particularly processed industrial products.

Notably, the country's trade balance reported a surplus of $8.08 billion, a testament to the competitiveness of Vietnamese exports and the effectiveness of domestic production.

The domestic economic sector contributed $25.21 billion to total export turnover, a 26.2% increase, while the foreign-invested sector accounted for $67.85 billion, a 13.9% rise.

Domestic Consumption Drives Growth

Domestic consumption played a crucial role in Vietnam's economic resurgence, contributing 56.77% to overall growth. Retail sales of consumer goods and services saw an 8.2% year-on-year increase, underscoring the strength of consumer demand within the country.

Primary Sectors Provide Steady Support to GDP Growth

While the agriculture, forestry, and fishery sectors exhibited moderate growth, their contributions to the overall GDP increase were noteworthy. The agriculture sector increased by 2.81%, contributing 0.26 percentage points; the forestry sector grew by 4.08%, contributing 0.02 percentage points; and the fisheries sector expanded by 3.46%, contributing 0.08 percentage points.

Inflationary Pressures

Despite the impressive economic performance, Vietnam faced inflationary pressures, with the consumer price index (CPI) rising 3.77% year-on-year in the first quarter of 2024.

Investment Inflows Bolster Growth Momentum

Investment played a crucial role in Vietnam's economic growth, with realized social investment capital reaching USD 24.56 billion, a 5.2% year-on-year increase. Foreign direct investment (FDI) also contributed significantly, with FDI capital realized in Vietnam reaching $4.63 billion, a 7.1% year-on-year increase.

Moderated Credit Growth, Booming Stock Market

There were developments in the banking and financial sectors, with capital mobilization by credit institutions decreased by 0.76% compared to the end of 2023, while the economy's credit growth reached 0.26%. Additionally, the stock market witnessed a surge in trading activity, with the average transaction value increasing by 28.2% compared to 2023.

Robust Revenue Growth, Controlled Spending

Regarding the government's fiscal performance, total state budget revenue in the first quarter of 2024 reached 31.7% of the yearly estimate and was up 9.8% over the same period last year. Meanwhile, total state budget expenditure was equal to 18.6% of the yearly estimate and an 8.3% increase over the same period last year.