Vietnam to grow 6.5% in 2025 backed by domestic factors: VinaCapital

In a latest report titled ‘Looking Ahead to 2025’, VinaCapital chief economist and head of market research Michael Kokalari said Vietnam’s exports to the United States surged by more than 20 per cent this year, primarily driven by a 40-per cent increase in electronics and high-tech products, marking a significant recovery from the 10-per cent decline last year.

However, the extraordinary increase in exports to the United States is expected to moderate next year, partly due to the anticipated ‘soft landing’ economic slowdown in the market.

Additional reasons to expect slower export growth next year are related to the US inventory re-stocking cycle.

Moreover, as exports across Asia are now up due to a ‘pull-forward’ demand in the lead-up to Donald Trump assuming office, the demand will be lower next year, the report noted.

Consequently, Vietnam’s manufacturing output growth will likely drop in 2025, as most manufactured products are destined for foreign markets.

Real retail sales growth in the country is estimated at 6 per cent this year—below the typical 8-9-per cent growth rate.

Vietnam has indicated it will raise infrastructure spending in 2025, and therefore, this and other measures are expected to also make consumers more confident to increase their spending.

VinaCapital expects manufacturing growth in the country to drop from 10 per cent this year to 6 per cent next year, which would knock about 1 per cent point off the GDP growth. It projects that infrastructure spending will grow at 15-20 per cent to $31 billion in 2025.

In the first half of 2025, falling export growth will likely deal a bigger blow to Vietnam’s GDP growth than many economists expect. That dip would probably prompt aggressive government actions to support the economy, especially in light of the very ambitious GDP growth targets, the company noted.

The net result could be subdued growth at the beginning of 2025, followed by a strong acceleration towards the end of 2025, Kokalari added.

ALCHEMPro News Desk (DS)