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Vietnam’s economic performance in Q3 2024 reflects a dynamic mix of growth and challenges as the country continues to recover from global economic disruptions. With a strong GDP growth rate of 7.4%—the second highest in the last five years—Vietnam is set on a path of expansion. Industrial output, foreign direct investment, and the services sector are contributing to this momentum. However, inflationary pressures, typhoon damages, and export market slowdowns remain points of concern. This article will explore Vietnam’s Q3 2024 key economic indicators and assess their impact on future growth prospects. 

Overview of Vietnam’s Economic Performance in Q3 2024

GDP Growth Rate in Q3 2024 

Vietnam’s GDP expanded by 7.4% year-on-year in Q3 2024, maintaining a steady recovery fueled by industrial growth, foreign investment, and robust domestic consumption. The economy grew 6.82% in the first nine months, surpassing growth rates from pandemic-impacted years but falling slightly below pre-pandemic highs. Therefore, three key factors are highlighted: 

  • Strong contributions from the manufacturing and services sectors 
  • Growth in exports, despite global demand challenges 
  • Consumer spending recovery 

When compared to Q2 2024 (6.9%) and Q3 2023 (13.67%), this performance highlights a slower recovery rate but remains promising for sustained growth into Q4 2024, where continued industrial output and investment are expected to drive further progress. 

Inflation and Monetary Policy 

Inflation in Vietnam averaged 3.88% in Q3 2024, influenced by rising global commodity prices and exchange rate fluctuations. This has placed upward pressure on business costs and reduced purchasing power for consumers. 

The State Bank of Vietnam implemented monetary measures to curb inflation, including adjusting interest rates and managing currency depreciation. Looking ahead, inflation is expected to stabilize at 3.6% for the year, remaining below the State Bank’s 4.5% target, as energy prices ease, and global financial conditions improve. 

Sectoral Performance and Key Drivers of Growth 

Manufacturing and Exports 

Manufacturing remained a key growth driver, expanding by 11.4%—the highest in 13 quarters. Electronics, textiles, and footwear led the charge, contributing significantly to the economy. However, global demand uncertainties, particularly in the U.S. and EU markets, posed challenges to export growth. 

Vietnam’s exports increased by 15.68% year-on-year, while a trade surplus of $20.8 billion was recorded—though this was lower than in previous years due to a slower recovery in key markets. 

Foreign Direct Investment (FDI) in Vietnam 

Breakdown of FDI Capital in Vietnam

Vietnam has consistently attracted substantial FDI over the years, with steady increases observed across various sectors. In the first nine months of 2024, Vietnam recorded a total FDI of USD 20.2 billion, marking a 7.7% increase compared to the same period in 2023. The previous years saw varying growth rates, with USD 18.8 billion in 2023 and USD 19.1 billion in 2022. The manufacturing and processing industries continue to lead FDI inflows, accounting for over 60% of total investment. High-tech industries, real estate, and retail also witnessed significant capital injections. 

Analysis of Trends and Sectors Attracting FDI 

Key sectors driving FDI growth include electronics, energy (renewables and infrastructure), and green technologies, reflecting Vietnam’s push towards sustainability. Electronics giants such as Samsung and LG continue expanding their production facilities, while foreign investors are increasingly eyeing Vietnam’s booming renewable energy market. Moreover, Vietnam’s participation in regional trade agreements, such as the RCEP and CPTPP, has enhanced investor confidence. 

Insights Into the Impact of FDI on Vietnam’s Economy 

FDI plays a critical role in Vietnam’s economic development, contributing to job creation, technological advancements, and increased exports. The influx of capital has helped Vietnam become a major manufacturing hub in Southeast Asia. Additionally, FDI supports Vietnam’s transition into higher value-added industries like electronics and automotive components, further strengthening the country’s global supply chain position. 

FDI CAPITAL IN 9 MONTHS OVER THE YEARS

FDI CAPITAL IN 9 MONTHS OVER THE YEARS | Source: VN Economy

Opportunities from Strategic Partnership

Strengthening U.S -Vietnam Comprehensive Strategic Partnership 

In a recent meeting in New York, U.S. President Joe Biden and Vietnam’s General Secretary Tô Lâm marked the one-year anniversary of their Comprehensive Strategic Partnership. President Biden reaffirmed the U.S.’s commitment to a strong, independent, and prosperous Vietnam. Both leaders reflected on the legacy of the late General Secretary Nguyễn Phú Trọng, whose contributions have shaped the growing U.S.-Vietnam relationship. 

As the partnership enters its second year, the leaders expressed optimism about expanding collaboration in areas such as economic growth, technology, and security. Key initiatives include advancing cybersecurity cooperation, strengthening semiconductor supply chains, and ensuring peace and stability in the Indo-Pacific, particularly in the South China Sea. President Biden also emphasized the importance of ASEAN centrality and human rights, reinforcing the deepening ties between the U.S. and Vietnam. 

Vietnam General Secretary and President To Lam met with US President Joe Biden

Vietnam General Secretary and President To Lam met with US President Joe Biden

Vietnam and France Upgrade Relations to Comprehensive Strategic Partnership 

In October 2024, during a visit by Vietnamese President Tô Lâm to Paris, Vietnam and France officially elevated their relationship to a “comprehensive strategic partnership”—Vietnam’s highest level of diplomatic ties. This move highlights Vietnam’s growing role in global supply chains, a result of its flexible “bamboo diplomacy” strategy. 

Vietnamese leader To Lam’s working trip to France in the spotlight

Vietnamese leader To Lam’s working trip to France in the spotlight | Source: VOV

Key outcomes of the visit include enhanced cooperation in security and defense, with leaders agreeing to expand into new sectors like aerospace, artificial intelligence, and airport transport infrastructure. Trade between Vietnam and France reached $3.4 billion in the first eight months of 2024, a 6.9% increase from the previous year. Moreover, Vietnam has also strengthened ties with other top global partners, including the United States, China, India, South Korea, Japan, Russia, and Australia.

Potential Opportunities Come From E-Commerce 

Vietnam’s Rise as ASEAN’s Fastest-Growing Digital Economy in 2022 and 2023 

Vietnam’s digital economy has been growing at an impressive pace, with a 28% growth rate in 2022 and 19% in 2023, making it the fastest-growing digital economy in ASEAN. E-commerce remains a key contributor, accounting for over 60% of Vietnam’s digital economy. The surge in online retail, digital payments, and ride-hailing services is primarily fueled by a young, tech-savvy population and rising internet penetration, which reached 75% of the population by the end of 2023. 

TEMU’s rapid rise in the global e-commerce market is reshaping the cross-border shopping landscape. Leveraging its innovative fiduciary model and backed by PDD Holdings, TEMU offers an unparalleled online shopping experience with high-quality products at competitive prices. With its successful launches across the US and plans for further expansion into Canada, Europe, and Vietnam, TEMU continues to revolutionize the e-commerce industry, providing consumers and merchants access to a global marketplace like never before.

E-commerce as a Driving Force Behind Digital Economy Growth

Vietnam’s e-commerce market is projected to reach USD 56 billion by 2025, up from USD 23 billion in 2023. Platforms like Shopee, Lazada, and Tiki dominate the landscape, while social commerce is gaining popularity with influencers and brands leveraging social media to sell products. The pandemic accelerated the shift towards online shopping, leading to a permanent transformation in consumer behavior. Major investments in e-commerce infrastructure, logistics, and digital payments are further propelling the sector’s growth.

Projections for Continued Expansion of Vietnam’s Digital Sector

Vietnam’s digital economy is expected to maintain double-digit growth rates through 2025, driven by advancements in fintech, online education, and healthtech. The government’s supportive policies, such as the National Digital Transformation Program, are encouraging digital innovation across industries. With continued investments in technology, Vietnam is poised to become a regional hub for e-commerce and digital services, boosting its overall economic development in the years to come.

Challenges and Risks to Vietnam’s Economic Outlook

Global Market Slowdowns and Export Dependency

Despite robust industrial growth, Vietnam’s reliance on exports makes it vulnerable to slowdowns in global markets, especially in Europe and North America. Trade tensions and shifting supply chains have added additional risks, leading to fluctuations in export demand.

Domestic Challenges: Inflation and Workforce Pressures

Rising inflation has impacted production costs, while labor shortages in the manufacturing and services sectors are creating bottlenecks. The government has responded by enhancing workforce development programs and offering tax cuts to alleviate pressure. 

Final Thoughts 

To sum up, Vietnam’s GDP is expected to grow by 6.5% in 2025, driven by continued investment in technology, renewable energy, and infrastructure development. The digital economy, particularly e-commerce, will play a pivotal role in sustaining growth.  The Vietnamese government’s commitment to reducing bureaucratic hurdles, improving the business environment, and enhancing workforce skills will be crucial. Investments in technology and innovation will also attract high-quality FDI, contributing to long-term sustainable growth.

Vietnam’s economic performance in Q3 2024 reflects resilience amid challenges. Strong GDP growth and FDI inflows signal positive momentum, while inflationary pressures and global uncertainties remain potential obstacles. However, with strategic reforms and a focus on high-growth sectors like digital technology and infrastructure, Vietnam is poised to sustain its growth trajectory into 2025 and beyond. Keep an eye on these key trends to stay informed about Vietnam’s evolving economic landscape at our FREE “DOING BUSINESS IN ASEAN 2024-2025” booklet today and take the first step towards success in this dynamic region. 

Source: VN Express International, Vietnam Investment Review, VietData, The White House

Source of Asia: Helping You Navigate Opportunities in ASEAN 

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