However, the country’s economy is not yet back to its pre-pandemic growth path, the report, titled 'Reaching New Heights in Capital Markets', noted.

While the net export contribution to GDP remains modest, expanding trade was accompanied by a gradual recovery of domestic demand with investment and consumption growth recording 6.7 per cent and 5.8 per cent year on year (YoY) in the first half (H1) of this year respectively.

Manufacturing output in Vietnam grew by 7 per cent YoY in H1 2024 from a low base and drove growth in the year so far, accounting for a quarter of GDP growth.

The agriculture sector’s contribution remains stable, at 0.4 percentage points.

Retail sales grew by 8.8 per cent in H1 2024, driven by goods sales on a stable trajectory since late 2022, but below a pre-pandemic average of 11.6 per cent.

Real income growth continues to be muted at 2.5 per cent YoY in June 2024, on par with annual 2.7 per cent average growth since 2022, but below pre-pandemic trends (8.4 per cent). Similarly, formal employment remained relatively stable with a 0.4 per cent YoY improvement in April 2024.

Recovering manufacturing exports contributed to a pick-up in investments. Total investment registered 6.8 per cent growth YoY in H1 2024, up from 4.8 per cent YoY in H1 2023, but below a pre-COVID average of 7.1 per cent YoY.

Similar to total investment, domestic private investment—close to 60 per cent of total investment—contributed 3.9 percentage points YoY growth in H1 2024, below its annual average of 4.7 percentage points over 2017-19.

Foreign investments represented the largest increase in investment categories in H1 2024, up by 13 per cent YoY. Meanwhile, public sector investment growth eased to 4 per cent YoY in H1 2024 compared to 20.5 per cent in H1 2023.

Bank asset quality remains a concern given rising non-performing loans, it said.

“To sustain growth momentum not only for the rest of the year but over the medium term, the authorities should deepen structural reforms, step up public investment while carefully managing emerging financial risks,” said World Bank East Asia and Pacific practice manager for macroeconomics, trade and investment Sebastian Eckardt in a press release.

The development of capital markets would offer a key source of long-term funding for the economy and help the country achieve its goal of becoming a high-income nation by 2045, the report added.

Fibre2Fashion News Desk (DS)