Vietnam’s economic situation in 2023 and prospects for 2024

Vietnam’s economy in 2023 has had many fluctuations in GDP growth in the first three quarters reaching 4.24%, focusing on the service, trade and tourism sectors. It is forecasted that the economy will continue to recover in the fourth quarter of 2023 and GDP growth in 2023 will reach 4.7%.

Vietnam’s economic situation in 2023

GDP growth index

In the first three quarters in 2023, Vietnam’s GDP growth rate has reached 4.24% and is on the rise again. This is a relatively positive signal in the context of the world economy facing many difficulties.

Growth focused mainly on the service, trade and tourism sectors, increased by 6.32% over the same period last year. The construction industry faces many difficulties due to the decline in world aggregate demand, increasing only 1.65% which is the lowest increase from 2011 to 2023.

In the context of a difficult world economy, the G7 and EU countries are all experiencing negative growth or close to zero. However, FDI capital in Vietnam still reached more than 25.76 billion USD, an increase of 14.7% over the same period, which showed that Vietnam’s economy is still a bright spot attracting foreign investors.

Factors affecting Vietnam’s economy in 2023

In the face of the world economic crisis, Vietnam’s economy cannot avoid many fluctuations due to foreign and domestic influencing factors that change the trend of Vietnam’s economic growth in 2023.
The decline of major partner economies such as the US, China and European countries led to a decline in both Vietnam’s exports and imports. In the first 9 months of 2023, Vietnam’s total export value decreased by 12%, of which exports to the US decreased by 15.8%, and exports to EU countries decreased by 8.9%. Imports also decreased sharply at 17.9% over the same period last year.

(Source: General Statistics Office)

Besides, indexes such as CPI increased at 3.16%, especially strongly in education, housing and construction materials at 8% and 7% respectively. Basic inflation is quite high, up to now, with an increase of 4.49% over the same period in 2022.
Inflation arose which forced banks to sharply increase interest rates many times. The prolonged conflict between Ukraine and Russia disrupted supply chains, causing the global economy to decline and fall into crisis. In addition, weak domestic demand also leads to slow economic growth.

Vietnam’s economy in relations with other countries in the region and the world

In general, the world economy is facing difficulties now. Some developed countries have negative growth such as EU countries, the UK, typically Japan has a negative growth rate of 0.6%, and G7 countries have almost zero growth. With the current growth rate, it can be seen that Vietnam is still one of the countries with a relatively high growth rate compared to other countries in the region and the world.

The table below of GDP growth for the third quarter of 2023 between Vietnam and other countries

Faced with the global economic situation, world economic organizations simultaneously reduced their expectations for economic growth in the Asia Pacific region in particular and world economic growth in general. Specifically, the OECD has adjusted the 2023 growth forecast of some countries such as Malaysia by 3.9%, Singapore by 1.4%, and Thailand by 2.8%… Meanwhile, Vietnam is forecasted to have GDP growth of 4.9% in 2023, quite high compared to other countries.

It can be seen that this is a difficult time for the entire world economy. The economy recovered more slowly than expected due to conflicts and wars between countries that disrupted trade links among big countries, and high inflation in the US and Europe affected exchange rates. This also negatively affects Vietnam’s export competitiveness, causing the economy to grow slowly.

See more: FDI attraction in Vietnam in 2023: sustained growth momentum, attracting global investors.

Forecast for Vietnam’s GDP in 2023

In the context of the slow growth of the world economy, Vietnam’s economic trend still has positive changes when maintaining a fairly high GDP growth rate. Vietnam is predicted to reach a growth rate of 4.7% in 2023 and 5 – 6% in the period 2024 – 2025 by many economic organizations such as the IMF and WB, while global growth is expected to increase by 3%. Thus, Vietnam’s economy is still highly appreciated by many international organizations and investors, thanks to adjustments and policies to attract investment and trade promotion:

• The Vietnamese government promotes policies to stimulate domestic consumption such as reducing value-added tax (VAT) from 10% to 8%; open-door policies and effective tourism stimulation to help visitor arrivals to Vietnam recover strongly compared to pre-pandemic times.
• Attracting FDI capital in Vietnam continues to be stable and tends to increase strongly again. Investment promotion and investment incentives policies for big countries such as the US and European countries have been promoted. Promoting green economic development policies, circular economy, and sustainable development are focused on by Vietnam by the trends and concerns of big investors.
• In addition, Vietnam possesses abundant labor resources, and labor wages in Vietnam are still low compared to European countries. Preferential policies to encourage investment in technology transfer are also the factors that strongly attract foreign investors.

With positive changes in the third quarter of 2023, when GDP growth tended to increase again combined with appropriate economic policies, Vietnam’s economy has been forecasted to fully recover strongly in the fourth quarter of 2023 and the next 2 years.

Information compiled from: General Statistics Office, Ministry of Finance.

See more: Foreign in Vietnam FAQs – updated 2023