Vietnam’s Market Outlook For 2024

Vietnam’s economic performance in the first half of 2024 has been robust, with multiple indicators showcasing resilience and growth. The General Statistics Office (GSO) projects a 6-6.5 percent growth rate for the year, aligning with the government’s target. This positive outlook is supported by strong GDP growth, increased foreign direct investment (FDI), and a dynamic labour market. Here, we outline the key takeaways from Vietnam's economic performance and discuss how these trends will affect businesses and workers.

Key Takeaways from Vietnam’s Economic Performance

1. Strong GDP Growth

Vietnam's GDP grew by 6.42 percent year-on-year in H1 2024, slightly lower than the 6.58 percent in the same period of 2022. Various institutions, including the United Overseas Bank (UOB) and the Asian Development Bank, have maintained their growth forecasts at 6 percent for 2024. AMRO revised its GDP growth forecast upward to 6.3 percent, with a 6.5 percent increase projected for 2025.

2. Robust FDI Inflows

FDI inflows reached nearly US$15.2 billion in the first six months of 2024, marking a 13.1 percent annual increase. Singapore led with US$5.579 billion, followed by Japan and Hong Kong. Disbursed capital was US$10.842 billion, the highest in the past five years.

3. Trade Performance

Vietnam’s export revenues in H1 2024 were US$190.08 billion, a 14.5 percent increase year-on-year, while import expenditures rose by 17 percent to US$178.45 billion, resulting in a trade surplus of US$11.63 billion. Key export sectors included electronics, machinery, apparel, and footwear.

4. Labour Market Trends

The unemployment rate remained stable at 2.27 percent, while the labour force increased to 52.5 million people. The average monthly income of contracted workers rose to VND7.5 million (US$295), reflecting a 7.4 percent year-on-year increase.

5. Inflation Concerns

Core inflation rose by 2.75 percent, with the average Consumer Price Index (CPI) increasing by 4.08 percent in H1 2024. Rising prices for health services, transport, and household appliances have contributed to inflationary pressures.

Implications for Businesses

1. Opportunities in Key Sectors

Businesses in manufacturing, electronics, and apparel can capitalise on the strong export performance. The robust FDI inflows also present opportunities for joint ventures and collaborations with foreign investors, particularly in high-tech and processing industries.

2. Navigating Inflation

With inflation expected to continue rising, businesses need to implement cost-control measures and consider adjusting pricing strategies to maintain profitability. This may involve renegotiating supplier contracts, optimising supply chains, and increasing operational efficiencies.

3. Leveraging Public Investments

Despite some stagnation in public investment disbursement, businesses can benefit from government initiatives aimed at boosting infrastructure and industrial development. Engaging with public projects can provide new revenue streams and enhance business operations.

4. Adapting to Labour Market Trends

Businesses must adapt to the growing labour force and rising wage levels by investing in employee training and development. Enhancing skill sets through continuous education and technology adoption can improve productivity and retain talent in a competitive market.

Implications for Workers

1. Employment Opportunities

The increase in job vacancies, particularly in industrial and service sectors, presents numerous opportunities for workers. Regions like Binh Duong and Ho Chi Minh City are seeing significant demand for labour, especially in manufacturing and electronics.

2. Wage Growth

The rise in average monthly income indicates positive wage growth. Workers in urban areas and high-demand sectors such as finance, real estate, and technology can expect better compensation and career advancement opportunities.

3. Skills Development

To remain competitive, workers should focus on acquiring new skills, particularly in technology and digital transformation. Programs and initiatives by the government and private sector aimed at upskilling can provide significant career benefits.

4. Managing Cost of Living

With rising inflation, workers need to manage their finances carefully. Increased costs for essential services and goods necessitate prudent budgeting and potentially seeking additional income sources.

Conclusion

Vietnam's economic outlook for 2024 remains optimistic, driven by strong GDP growth, robust FDI inflows, and a dynamic labour market. However, businesses and workers must navigate challenges such as rising inflation and competitive market conditions. By leveraging growth opportunities, investing in skills development, and implementing strategic cost-management practices, businesses and workers can thrive in this evolving economic landscape.

By staying informed and proactive, both businesses and workers in Vietnam can effectively respond to the economic trends and challenges in 2024, ensuring sustainable growth and development.

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Reference Links:

https://www.vietnam-briefing.com/news/vietnam-economy-h1-2024-key-indicators-and-growth-forecast.html/

https://tradingeconomics.com/vietnam/inflation-cpi

https://english.news.cn/20240717/1d56931eefd5446fab3ce65acbbf0eec/c.html

https://www.vietnam-briefing.com/news/vietnam-labor-market-report-for-h1-2024-outlook.html/

https://www.reuters.com/markets/asia/vietnam-q2-gdp-growth-accelerates-inflation-pressure-rises-2024-06-29/

https://www.jpmorgan.com/insights/global-research/outlook/mid-year-outlook