VINACHEM

With ambitious economic goals, the government is focusing on public investment, exports, and institutional reforms while navigating global uncertainties.

Vietnam's economy faces both challenges and opportunities in 2025, with the government setting an ambitious GDP growth target of 8% - higher than the 6.5–7% goal initially set by the Party Central Committee and National Assembly and well above the 7.09% growth rate of 2024.

With global economic uncertainties looming, what are the key drivers of this ambitious target, and what challenges lie ahead?

Government’s determination and business confidence

The government has emphasized that rapid but sustainable growth is the priority, ensuring macroeconomic stability, inflation control, and economic balance.

A February 2025 strategy report from SSI Research highlights the government’s willingness to accept higher inflation and budget deficits in order to channel more resources into infrastructure development, which is expected to drive economic expansion across multiple sectors.

Public investment is set to be a key growth engine in 2025. With a strong push to accelerate major infrastructure projects, public investment will not only create jobs but also stimulate growth in related industries.

The government also aims to boost exports by implementing comprehensive political, economic, and diplomatic measures. This includes strengthening economic ties with the U.S., China, and key trading partners while maximizing the benefits of existing free trade agreements (FTAs) such as EVFTA, RCEP, and CPTPP.

Recently, UOB Bank raised Vietnam’s GDP growth forecast from 6.6% to 7%, citing positive trends in manufacturing, domestic consumption, and tourism. The bank noted that while 8% growth is ambitious, it is still within reach given the right conditions.

From a business perspective, expectations are also high. SSI Research predicts that the profits of companies listed on the Ho Chi Minh City Stock Exchange (HoSE) will continue to rise, with 84 major firms projected to see profit growth of 18.6% in 2025 - significantly higher than the 11.5% growth of 2024. This signals strong corporate optimism for the upcoming year.

External risks rise, internal strengths need reinforcement

While the Vietnamese government and businesses remain optimistic, external risks pose significant challenges.

According to SSI Research, the Federal Reserve’s slow pace of interest rate cuts could pressure the USD/VND exchange rate, reducing Vietnam’s appeal to foreign investors.

Adding to this uncertainty, the protectionist policies of U.S. President Donald Trump pose a "wildcard risk" for Vietnam’s export-driven economy. Potential tariffs on Vietnamese goods could erode competitiveness in global markets.

On February 9, Trump announced plans to impose a 25% tariff on all imported steel and aluminum, along with retaliatory tariffs on countries with trade barriers against the U.S. If implemented, such policies could severely impact Vietnam’s export sector.

Beyond global trade tensions, Vietnam’s domestic economy also faces challenges. Domestic consumption remains weak, with no clear signs of recovery, which could reduce the effectiveness of stimulus measures and slow growth in the service sector.

Key policy measures for achieving 8% growth

To counter these challenges and achieve 8% GDP growth, Vietnam must focus on strengthening internal growth drivers such as domestic consumption, public investment, and digital transformation.

Further improving the investment climate is critical. Reducing bureaucratic obstacles, attracting more foreign capital, and enhancing the efficiency of capital markets will be crucial. Key initiatives include the KRX trading system, amended Securities Law, and Decree 155/2020, which will help foster capital market growth.

Inflation control and exchange rate stability are also vital. The State Bank of Vietnam must implement flexible and effective monetary policies to maintain macroeconomic stability and investor confidence.

Additionally, institutional reforms must remain a top priority. The government’s restructuring efforts - including bureaucratic streamlining and resolving real estate sector issues - should continue.

During a business meeting on February 10, Prime Minister Pham Minh Chinh emphasized that institutional bottlenecks remain a major challenge, calling them “the bottleneck of bottlenecks”, while also noting they represent “the breakthrough of breakthroughs” for economic growth.

Despite these challenges, exports will remain a key growth driver. Vietnam must diversify export markets, leverage trade agreements, and enhance product competitiveness to mitigate external risks.

Achieving 8% GDP growth in 2025 will require synchronized efforts from the government, businesses, and the public. While significant hurdles remain, with the right strategies and policies, Vietnam has the potential to reach this ambitious goal, laying the foundation for sustained long-term growth.  – Source: VNN