Vietnam’s Economy: Strong Growth but Challenges Remain for Sustainable Development

The International Monetary Fund predicts a strong economic growth of nearly 6% this year, attributing it to demand and foreign direct investment, as well as supportive policies. Despite the challenges, Vietnam’s economy is expected to grow by 5% in 2023 due to strict government policies. Factors such as disruptions in the real estate market, financial stress and a significant drop in exports had a strong impact on the economy.

The IMF experts predict that economic growth will return to nearly 6% in 2024, supported by positive trends in exports and tourism, as well as the implementation of an expansive fiscal and monetary policy. However, risks remain high, especially in terms of weakening exports, global geopolitical tensions and trade disputes that could affect Vietnam’s economy. In addition, domestic demand is expected to remain weak, with challenges related to high debt levels and a slow recovery in the housing market.

Inflation is expected to hover around the State Bank’s target level of 4-4.5% this year. While inflation rose in early 2024, driven in particular by food prices, core inflation remains relatively low and stable. The State Bank may need to tighten monetary policy if inflationary pressures continue, especially if exchange rate pressures continue to affect domestic inflation.

Fiscal policy is also expected to support economic growth in 2024. Public sector wage increases are planned along with efforts to boost public investment. Strengthening fiscal management is critical for long-term sustainability along with improving the quality of public spending, addressing challenges related to population aging and climate change and strengthening the social safety net are also important aspects for sustainable economic growth.

Legal reforms are needed for stability and growth in the banking sector and real estate market along with efforts restructure weak companies are crucial for sustainable economic development.

In conclusion, despite challenges such as disruptions in the real estate market and a significant drop in exports, Vietnam’s economy is expected to grow by nearly 6% this year due to supportive policies such as demand and foreign direct investment. The IMF predicts that economic growth will return to nearly 6% in