AMRO revises Việt Nam’s 2024 growth forecast upward to 6.3%, the highest in ASEAN

The ASEAN+3 Macroeconomic Research Office (AMRO) revised Việt Nam’s economic growth forecast upward to 6.3 per cent for 2024 in its latest update released on Tuesday.

The growth rate is 0.3 percentage points higher than the 6 per cent forecast in April and is the highest among ASEAN countries for 2024.

The Singapore-based organisation maintained its forecast for Việt Nam’s GDP growth in 2025 at 6.5 per cent.

In its flagship report, AMRO revised the growth of most ASEAN countries downward for 2024, with the Philippines projected to have the second-highest growth rate at 6.1 per cent, followed by Cambodia at 5.6 per cent and Indonesia at 5.2 per cent.

The report by AMRO Chief Economist Hoe Ee Khor noted that Việt Nam was hit hard last year by the downturn in external demand, but is expected to benefit from a turnaround in external demand this year.

“This is going to be a very strong growth year for Việt Nam. The country is one of those highly open economies that benefit greatly from trade,” he said.

However, Khor also pointed out some weaknesses in the economy due to uneven growth across sectors.

“In the real estate sector, for instance, there is a struggle from a downturn. There is scope for the authorities to implement targeted measures to help revive the real estate sector and also support the vulnerable group of small and medium enterprises (SMEs), many of which are still lagging behind,” he said.

AMRO staff forecast Việt Nam’s inflation to rise by 3.8 per cent this year, up from 3.6 per cent in its April update.

Việt Nam's economy was reported to have grown by 6.93 per cent in the second quarter and 6.42 per cent in the first six months of 2024. The consumer price index (CPI) rose by 4.08 per cent in the first half of 2024 compared to the same period last year, according to the General Statistics Office.

In its latest forecast for the country’s GDP growth, the Ministry of Planning and Investment estimated that Việt Nam's economy might surpass forecasts to grow by 7 per cent this year. In one scenario, growth could hit 6.5 per cent, matching the National Assembly's target. In a more optimistic scenario, growth could reach 7 per cent, with higher rates in the last two quarters.

Steady growth forecast for the region

The growth forecasts for the ASEAN+3 region remain broadly unchanged at 4.4 per cent, with ASEAN's growth forecast unchanged at 4.8 per cent.

“The overall balance of risks to the region’s outlook has improved since April,” the chief economist said.

“Real estate aside, China’s economy continues to grow robustly. Tourism has rebounded close to pre-pandemic levels for most economies in the region, and the global semiconductor recovery is broadening to benefit more economies and sectors in ASEAN+3.”

In the report, AMRO staff mentioned that US-related risk factors have become more prominent. Expectations of prolonged higher interest rates in the world's largest economy have impacted many of the region’s currencies. Additionally, ASEAN+3 asset markets may experience increased volatility leading up to the November presidential election, especially if it exacerbates US-China trade tensions.

"The bad news is that the region’s outlook next year could be significantly affected by the outcome of the US elections. The good news is that the region has weathered similar shocks before," Khor said.

"Our economies need to continue rebuilding policy space and implementing policies to enhance resilience to shocks."