Vietnam's economy projected to expand by nearly 6% in 2024: IMF

Monetary and fiscal policies are expected to remain supportive given sluggish domestic activity, but will also need to manage downside risks, including if inflation pressures were to increase. Policies should also continue to strengthen the health of the financial system, IMF noted.

A new wave of reforms to boost productivity growth is needed to maintain Vietnam’s high growth over the medium term amidst demographic and climate headwinds, it said in a release.

Inflation picked up in the first quarter (Q1) this year, driven partly by rising food prices, though core inflation remained relatively low and stable.

The external current account posted a large surplus in 2023, 5.8 per cent of GDP, mainly reflecting a significant contraction in imports.

Domestic demand growth is expected to remain subdued as corporations navigate through high debt levels. Inflation is expected to hover around the central bank’s target of 4-4.5 per cent this year, the IMF said.

"Downside risks are high. Exports, a key driver for Vietnam’s economy, could weaken if global growth disappoints, global geopolitical tensions persist, or trade disputes intensify," it noted.

Vietnam needs a new wave of reforms to sustain high economic growth amid less-favourable demographics and climate change challenges, it said.

Increasing productivity, further investing in human and physical capital and incentivising private investment in renewable energy is key. Improving the functioning of the capital markets would also help boost productivity, it added.

Fibre2Fashion News Desk (DS)