Hanoi (VNA) - Vietnam’s GDP growth is projected to reach 7.5% under normal conditions and up to 8% in an optimistic scenario for 2025, according to a research group at the Bank for Investment and Development of Vietnam (BIDV).
This outlook was shared by Dr. Can Van Luc, Chief Economist at BIDV, during a recent seminar reviewing Vietnam's macro-economic performance in 2024 and exploring prospects for 2025. However, he noted that achieving such ambitious growth rates will be a challenge.
Global economic growth is expected to decelerate further, with a rate of 3.2% in 2024 as compared with the 3.3% in the previous year, well below the 3.5% average during 2011-2019 period.
In addition, geopolitical risks remain high, and uncertainties surrounding global trade policies are growing. Luc highlighted the potential increase in trade tariffs following the inauguration of President-elect Donald Trump.
These global challenges will make it harder for Vietnam to sustain robust export and investment growth. Despite ongoing efforts to boost public investment, its contribution to GDP growth will likely remain modest.
Luc pointed out that social investment accounts for approximately 37–40% of GDP, with the private sector contributing 56%. Meanwhile, final consumption, encompassing both public and private spending, makes up about 62.5% of GDP. He emphasised that Vietnam’s economic momentum in 2025 will rely heavily on domestic resources.
Challenges for businesses
Despite the emphasis on private sector-driven growth, the economist expressed concerns over the numerous obstacles for businesses. These include unresolved legal issues related to land, challenges in land valuation, rising input costs - such as significant wage hikes and logistics costs that have surged by 30% and an uneven recovery of orders.
The government’s ongoing apparatus restructuring could also affect the efficiency of administrative procedures, he added.
Such challenges are slowing the pace of private investment growth, he stated, elaborating that while private investment saw some recovery in 2024, increasing to around 7% compared to 2.7% in 2023, it remained far below the pre-COVID-19 rate of 17%.
Dr. Nguyen Minh Thao, Head of the Business Environment and Competitiveness Department at the Central Institute for Economic Management (CIEM), highlighted a slowdown in new enterprise growth. Before the pandemic, the ratio of new businesses to those exiting the market was typically 3:1. It had dropped to 1.26 in 2023, and 1.18 last year.
She identified institutional barriers as a significant impediment, ranging from regulatory issues to ineffective implementation. Even efforts to address these barriers often lack comprehensive solutions, focusing narrowly on specific sectors.
“Many businesses operate across multiple industries, so while reforms in one area may benefit them, persistent challenges in others continue to hinder their operations,” Thao explained. Local enterprises also reported a slowdown in reform initiatives compared to previous years.
Achieving higher growth targets - especially the rates exceeding 8% - will be difficult without substantial progress in private sector expansion.
“Despite 35 years of private sector development, starting with the Company Law and the Law on Private Enterprises in 1990, businesses still face numerous hurdles,” said Nguyen Duy Ninh, CEO of Ho Guom Group. He noted that while mechanisms and policies often impose additional burdens, supportive measures frequently remain unimplemented.
For instance, the Law on Support for Small- and Medium-Sized Enterprises (SME Law), enacted in 2017, includes provisions for preferential corporate income tax rates that have yet to take effect. Additionally, credit guarantee funds remain underutilised, despite holding significant reserves.
Luc suggested the introduction of a new resolution on private sector development to replace Resolution 10-NQ/TW of 2017, as many of its key objectives have not been effectively realised.
At the seminar, researchers from the Vietnam Institute for Economic and Policy Research (VEPR) proposed six policy groups to achieve the best-case growth scenario.
“All recommendations aim to improve the business environment,” said Dr. Nguyen Quoc Viet, Deputy Director of VEPR. He emphasised the importance of fostering innovative and sustainable business for enterprises, as they are the primary drivers of economic growth./.
VNA
