Vietnam’s economic overview (2Q2024)

1. Economic growth

Vietnam's economy in the second quarter of 2024 demonstrated resilience, posting a GDP growth rate of 6.93% year-on-year. This growth, though slightly lower than the 7.99% recorded in the same period of 2022, reflects robust performance across key sectors. The agriculture, forestry, and fishery sector expanded by 3.34%, contributing 5.36% to the overall GDP growth, driven by increased output in perennial crops and aquaculture. Meanwhile, the industrial and construction sector grew by 8.29%, contributing 45.73%, and the service sector expanded by 7.06%, contributing 48.91%.

For the first six months of 2024, Vietnam's GDP grew by 6.42%, slightly below the 6.58% growth rate observed in the corresponding period of 2022. Within this period, agriculture, forestry, and fishery grew by 3.38%, industry and construction by 7.51%, and services by 6.64%. These sectors played pivotal roles in driving economic expansion and sustaining growth momentum.

2. Industrial production

Industrial production in Vietnam surged in the first half of 2024, propelled by robust performances across various sub-sectors. Manufacturing, a key driver of economic growth, expanded by 8.67%, contributing significantly with 2.14 percentage points to GDP growth. Electricity production and distribution increased by 13.26%, while water supply and waste management grew by 7.13%. However, the mining sector contracted by 7.22%, impacting overall industrial output.

The industrial production index showed positive growth across 56 localities, underscoring widespread economic activity and sectoral resilience. Employment in industrial enterprises also saw a 3.8% increase year-on-year, reflecting expanding operations and production capacities.

3. Business dynamics

Business registration and activity in Vietnam remained vibrant in 2024. In June alone, the country witnessed the establishment of 15.7 thousand new enterprises, marking a notable 19.1% increase from the previous month and a 13.1% rise compared to the same period last year. Additionally, over 7.5 thousand enterprises resumed operations, showcasing economic adaptability and recovery.

Cumulatively for the first half of 2024, nearly 119.6 thousand enterprises were newly registered or resumed operations, representing a 5.3% increase compared to the same period in 2023. This entrepreneurial activity underscores Vietnam's dynamic business environment and ongoing efforts to foster economic growth through private sector expansion.

4. Investment

Total social investment capital in Vietnam reached 834.3 trillion VND in the second quarter of 2024, marking a 7.5% increase year-on-year. Foreign Direct Investment (FDI) implemented during the period amounted to 10.84 billion USD, representing an 8.2% rise compared to the same period last year. This surge in FDI, the highest recorded in the first half of the year over the past five years, highlights Vietnam's attractiveness as a preferred destination for international investors amidst regional economic integration and global supply chain shifts.

Vietnam's outbound investment, however, saw a decline, with 57 newly certified investment projects totaling 118.6 million USD, reflecting a 19.3% decrease from the previous year. Nevertheless, ongoing efforts to promote domestic and international investment initiatives are crucial for sustaining economic growth and diversifying Vietnam's industrial base.

5. Trade and retail

Vietnam's trade sector continued to thrive in the first half of 2024, with exports of goods totaling 190.08 billion USD, marking a robust 14.5% increase year-on-year. The domestic economic regions contributed 53.39 billion USD to this total, reflecting a 20.6% rise and underscoring domestic market expansion. Meanwhile, sectors with foreign investment, including crude oil, reached 136.69 billion USD, up by 12.3%.

Retail sales of goods and consumer services expanded by 8.6% in the first half of 2024, driven by resilient domestic consumption and increased purchasing power. This growth, though slightly lower than the 11.3% recorded in the same period of 2023, underscores Vietnam's evolving consumer market and economic resilience amid global economic uncertainties.

6. Economic indicators

Inflation, as measured by the Consumer Price Index (CPI), increased by 4.08% in the first half of 2024 compared to the same period last year. Core inflation, excluding volatile food and energy prices, rose by 2.75%, reflecting moderate price pressures amid sustained economic expansion. The Vietnamese dong appreciated marginally against the US dollar, contributing to stability in the currency markets and supporting overall economic confidence.

Looking ahead, Vietnam's economic outlook remains positive, supported by robust industrial production, dynamic business activity, and sustained investment inflows. Challenges such as global economic uncertainties and inflationary pressures necessitate vigilant monitoring and proactive policy responses to ensure continued economic stability and inclusive growth across all sectors.

Source: GSO

Compiled by Vietnam Business Information