Vietnam’s economy in Q1/2024 shows strong recovery and positive results across various sectors, setting the stage for successful the achievement of the 2024 socio-economic development plan.

Producing led screen components at Ohsung Vina Company, Lien Ha Thai Industrial Park, Thai Binh Province. (Photo: Duy Linh)

Despite prevailing domestic and global challenges, the GDP growth rate for Q1 is estimated to have reached 5.66%, marking a favourable kick-off for Vietnam's economic journey in 2024. This growth closely aligns with the ambitious scenario outlined by the Government in Resolution 01/NQ-CP, focusing on key tasks and solutions to implement the Economic-Social Development Plan and the state budget estimates for 2024.

Positive economic recovery

Reports from the regular Government meeting in March 2024 and the online Government conference with localities, delivered by Minister of Planning and Investment Nguyen Chi Dung, underscored the continued positive momentum in Vietnam's socio-economic landscape. The economy has shown steady recovery, with each month surpassing the previous, culminating in significant achievements.

GDP growth in the first quarter reached 5.66%, surpassing the government's projections and marking the highest growth rate for the same period since 2020. Industrial and construction sectors are gradually regaining growth momentum. The macroeconomy remains fundamentally stable, with controlled inflation and secured major economic balances. The interest rate environment has been maintained at a low level, ensuring ample foreign exchange supply to support growth, production, and exports, while banking system safety has also been ensured.

The import-export turnover witnessed positive growth, with an estimated trade surplus of 8.08 billion USD. Total social investment capital in Q1 rose by 5.2% compared to the same period, reflecting a trend of recovery in domestic production and business across various sectors. This growth momentum is expected to propel further advancements in subsequent quarters, supporting economic growth in 2024 amid ongoing economic challenges.

Vietnam had attracted 6.17 billion USD in foreign direct investment (FDI) in Q1, a year-on-year rise of 13.4%, with actual capital reaching 4.6 billion USD. Several major enterprises have committed investments in Vietnam, particularly in electronics, semiconductor chips, and renewable energy.

“This result is attributed to our timely seizing of opportunities from the global investment trend, the favourable circumstances, and Vietnam's new position. We have focused on promoting investment, especially through high-level diplomatic activities of the Party and State leadership," noted Minister of Planning and Investment Nguyen Chi Dung.

GSO General Director Nguyen Thi Huong said that economic growth in Q1 aligns closely with the optimistic scenario. However, there are shifts among sectors compared to initial projections. “Notably, the industrial and construction sector outperformed expectations, while agriculture, forestry, fisheries, and the service sector showed lower growth rates than anticipated, highlighting areas for attention in the remaining quarters of the year,” she added.

Driving growth momentum

In addition to the positive economic recovery, Minister Nguyen Chi Dung pointed out the existing internal and external challenges posing pressures on macroeconomic stability, inflation, exchange rates, major balances, and management efforts to drive future growth.

The challenges include lingering difficulties in business operations and slow industrial production recovery. Domestic consumer demand in Q1 was lower than in the same period of 2023 and pre-COVID-19 years. Moreover, certain administrative procedures and policies remain sluggish in amendment, causing inconvenience for businesses and citizens.

He also highlighted emerging challenges such as a significant reduction in commercial aircraft numbers affecting domestic flights, resulting in increased airfare, impacting tourism and people's mobility. Another concerning issue is the withdrawal of nearly 74,000 businesses from the market in Q1, a 22.8% increase from the same period last year, alongside inflationary and exchange rate pressures.

Despite global economic and political uncertainties, Vietnam continues to leverage opportunities from major trends, trade shifts, global capital flow, and the recovery of demand from certain export markets and large trading partners. These conditions provide impetus to accelerate economic growth and achieve development goals in 2024, alleviating pressure on 2025, the final year of the 2021-2025 socio-economic development plan.

Based on updated operational scenarios, the Ministry of Planning and Investment proposes a growth scenario of 6.5% to the Government, slightly higher than the upper limit set in Resolution 01/NQ-CP. To achieve this growth target, it emphasises the need for consistent efforts from ministries, sectors, and localities to adhere to set goals, perspectives, and development orientations while overcoming challenges efficiently.

Priority tasks include synchronised implementation of policies supporting production, business, job creation, and livelihoods. Key focuses also lie in revitalising investment, consumption, and exports, maximising growth drivers through digital and green transformations.

Efforts will be directed towards boosting domestic trade promotion, stimulating domestic consumption, prioritising Vietnamese products, coordinating comprehensive tourism development, attracting domestic and international tourists, and expanding exports to major markets. Additionally, there will be a concentrated push to attract large-scale FDI projects, high-tech investments in processing, manufacturing, electronics, semiconductors, and hydrogen, alongside resolving issues hindering state-owned enterprises and inefficient projects, and promoting investment in key sectors and industries.