Vietnam’s economy is expected to maintain rapid growth through 2024 and beyond, driven by advancements in the digital economy, manufacturing, exports, and foreign direct investment. By investing in infrastructure, developing human capital, and continuing economic reforms, Vietnam aims to achieve equitable and sustainable growth in the future. The nation is positioned as a key player in the ASEAN region and an attractive destination for foreign investors, thanks to its favorable demographics, strategic location, and youthful workforce.
The nation is positioned as a key player in the ASEAN region and an attractive destination for foreign investors, thanks to its favorable demographics, strategic location, and youthful workforce. Over the last few years, Vietnam has significantly integrated into the global supply chain, becoming a favored destination for international companies as manufacturing shifts from China to Vietnam. As of 2024, Vietnam’s economy has continuously grew at one of the fastest rates among ASEAN countries. Its GDP growth rate has exceeded that of some of its ASEAN counterparts, averaging between 6 and 7% annually. Furthermore, Vietnam’s industrial sector, particularly in electronics, textiles, and footwear, has made important contributions to the country’s economic progress. Vietnam has successfully integrated into global supply chains by leveraging its competitive labor costs and favorable trade agreements. As a result, the country has become a major exporter of commodities both within ASEAN and internationally.
To date, Vietnam is a member of various regional and international organizations, including the UN, ASEAN, ASEM, APEC, the WTO, the Francophone, the Non-Aligned Movement, among others. Vietnam’s business environment benefits greatly from its membership in numerous free trade agreements, serving as a significant advantage in Vietnam’s trade relations, leading to reduced export costs. As of 2023, Vietnam has signed 16 FTAs so far and is in the process of negotiating EFTA, ASEAN – Canada FTA, and Vietnam – UAE FTA (WTO Center, 2023).
As a member of the ASEAN Economic Community (AEC), Vietnam enjoys tariff-free shipment of nearly all goods to most other Southeast Asian countries. In the last 15 years, agreements between ASEAN and various countries have expanded access to more regional markets. Regional Comprehensive Partnership (RCEP) has reinforced the effectiveness of these deals. Two of the most important are the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EUVFTA).
In the first half of 2024, Vietnam’s products export turnover was assessed at 190.08 billion USD, gaining 14.5% year on year and increasing the country’s trade surplus to 11.63 billion USD, according to the General Statistics Office. Imports also increased steadily, up 17% year on year to 178.45 billion USD. The domestic economic sector added 65.74 billion USD to import turnover, representing a 22.3% increase. Raw materials for production were the largest import category, making up a substantial 94% share, valued at 167.73 billion USD. The United States remained Vietnam’s leading export market, with an expected turnover of 54.3 billion USD.
Foreign direct investment (FDI) remains crucial for Vietnam to support post-COVID economic recovery and advance the government’s goal to achieve middle-income status by 2045. Foreign enterprises invested over 15.19 billion USD in the Vietnamese economy in the first six months of 2024, indicating a 13.1% increase over the same period last year. Additionally, in the first 6 months of the year, about 10.84 billion USD worth of FDI capital was disbursed, an increase of 8.2% over the same period in 2023. Meanwhile, Singapore emerged as the top investor USD, which represents nearly 36.7% of total foreign capital into Vietnam and shows an 86% year-on-year growth. It was followed by Japan, Hong Kong (China), the Republic of Korea, and China.
In summary, Vietnam’s economy showed mixed signs of recovery in 2023 and early 2024 according to the World Bank (2023). On the one hand, given its significant openness and deep integration into the global economy, Vietnam was unable to escape the effects of the ongoing war between Russia and Ukraine. Additionally, the country is facing challenges such as environmental concerns, infrastructure gaps, and regulatory issues. These factors could affect long-term sustainability and require continued government intervention and active participation from the private sector. On the other hand, Vietnam’s economic forecast remains positive, with ongoing growth fueled by manufacturing, exports, and foreign investment. Aligning strategically with global trade agreements and growing digital economy sectors will further bolster its position as a key player in Southeast Asia’s economic landscape. Lastly, embracing the Green Economy offers a sustainable path forward sustainable growth and development, enabling responsible and environmentally conscious business practices.
Huyen Nguyen
Managing Partner, Forvis Mazars in Vietnam
Minh Nguyen
Partner, Head of Advisory, Forvis Mazars in Vietnam