Vietnam’s 8% GDP growth ambition in 2025: Highlights and Challenges
“New Year, New Goals” - With the strong statement delivered by Vietnamese Prime Minister Pham Minh Chinh in his New Year article, it is to be expected that Vietnam will try to reach 8% growth in Economy, establishing the foundation for a proliferation period of double-digit amelioration starting from 2026. This ambitious target is likely driven by innovation, creativity, and breakthroughs in key sectors like digital transformation, green technology, and infrastructure development. It is believed that key projects in this year include expanding expressways, coastal roads, and high-speed railways, with a goal of completing 3,000 km of expressways and 1,000 km of coastal roads by the end of 2025.
As the motivation given, let’s look back at the highlights of 2024 and some potential challenges for this year:
HIGHLIGHTS:
Record-Breaking Trade Surplus and FDI Inflows: The FDI sector alone contributed $50.29 billion to the trade surplus, highlighting Vietnam's growing role in global supply chains
Digital Economy and E-Commerce Boom: With the important contributions of Mobile penetration, Social Commerce, and Cross-border trade, E-commerce sector is seen as one of the fastest-growing in Southeast Asia, proven by the GMV of $36 billion last year. Combining with the heavy investment of the government in digital infrastructure, including the National Digital Transformation Program, it aims to simplify customs procedures and improve internet connectivity, positioning Vietnam as a hub for cross-border e-commerce.
International Recognition for AI Development: With multiple tech giants currently investing heavily in Vietnam, latest is Nvidia, Vietnam has solidified its position in the global semiconductor supply chain, reached $507 billion in 2024 as national brand value, ranking 32nd globally.
Labor Productivity and Economic Freedom: With the golden age in workforce, Vietnam's labor productivity showed strength and flexibility in which grew by 5.7% in 2024, exceeding targets. The country also improved its economic freedom index, jumping 13 places to 59th globally, reflecting progress in institutional reforms and business environment improvements.
CHALLENGES:
Exchange Rate and Monetary Policy Pressures: Vietnam Dong is anticipated to be devaluated and possesses potential risks due to the stronger Dollars and the Fed Fund Rate policy of the US incoming government.
Dependence on FDI and Export-Led Growth: Vietnam's economy remains heavily reliant on FDI and exports, particularly from foreign-invested enterprises. This dependence makes it vulnerable to global economic fluctuations and limits the growth of domestic enterprises.
Inflation and Commodity Price Volatility: Although inflation was controlled below the target in 2024, there are risks coming from the fragile of commodity prices related to new policies, higher transportation fees due to geopolitics, and potential higher exchange rate of the Fed, resulting in the rise of inflation and goods.
The Challenges of Domestic Enterprises: Vietnamese businesses is currently meet difficulties from high-quality, low-cost Chinese products and rapid technological developments, including AI and digital transformation. This is the main reason why the stock index maintains a downward trend while the economy growth witnessed exceptionalism.
The Weakness of Vietnamese Stock Market: Despite of the magical GDP and great growth, the Vietnamese equities is under the pressure of massive selling off coming from the foreign investors, with 94 trillion VND, preventing the market from reaching the milestone of 1300. This consequence might be due to the lack of attraction in valuation when there are only a few enterprises possessing potential growth businesses, while others face challenges in their own sector and intensively global competitions such as the outperformance of the US stock market and the rise of other assets (Crypto, Gold, Bonds).
This year is to be expected to contain many fluctuations that might lead to negative consequences; however, it is also viewed as opportunities for Vietnam to get out of the title “Frontier Market” and ameliorate vigorously and independently with the reformation, political optimization, digital advancements and infrastructure developments, ultimately aiming for the provision of a better life to Vietnamese people.
Other striking news for this week:
1. Cryptocurrency experienced the first outflow in 2025
$44.2 billion is the amount of 2024 inflow investing into Crypto, nearly quadrupled the money in 2021. It is obvious that the biggest asset belongs to Bitcoin with $38 billion invested, following by ETH with $4.8 billion inflows. According to CoinShares, USA was the nation with the largest crypto purchase, at the milestone of $44.4 billion.
In contrast with the previous year, the asset kicked off 2025 with the modest outflow.
2. Justin Trudeau resigned after serving over 9-year period
Canadian Prime Minister Trudeau is resigning after nine years in office due to internal conflict of his party and a heavy pressure of the new tariff coming from the US. His decision is announced on January 6th in Ottawa. Trudeau is the Prime Minister serving the longest term over 75-year period.
3. The US Dollar and US Equity Market continues outperforming global economy.
The Dollar is a major key to watch during 2025 because of its spreading effect toward the world neither negatively or positively by movements, especially in the coming presidential term.
4. The US witnessed a strong labor market in the final month of 2024
Labor Market exits 2024 with the unemployment rate dropped to nearly 4.0% combining with the increase in workforce salary reaching to above 200K, which is the highest rise since last March.
5. There have been an uptick in Bond Yields since 2021
One suitable reason for this is the fear of inflation rising around the word, signaling the uncertainty and susceptibility related to the policies of the incoming US government.
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