Vietnam’s economic overview (3Q2024)

1. GDP Growth

Vietnam’s Gross Domestic Product (GDP) in the third quarter of 2024 is estimated to have grown by 7.40% compared to the same period last year. This growth was driven by several key sectors: agriculture, forestry, and fisheries grew by 2.58%, contributing 4.08% to the overall increase in the economy’s value-added. The industrial and construction sectors posted an impressive 9.11% growth, contributing 48.88% to the total increase, while the service sector grew by 7.51%, contributing 47.04%.

In terms of GDP usage for Q3 2024, final consumption increased by 7.02%, contributing 59.78% to the overall economic growth. Gross capital formation grew by 7.08%, contributing 39.03%. Additionally, exports of goods and services surged by 15.68%, while imports rose by 15.84%, with the trade balance contributing 1.19% to GDP growth.

For the first nine months of 2024, Vietnam’s GDP grew by an estimated 6.82% year-on-year. The agricultural, forestry, and fisheries sector expanded by 3.20%, contributing 5.37% to the economy’s overall value-added. Meanwhile, the industrial and construction sectors grew by 8.19%, contributing 46.22%, and the service sector grew by 6.95%, contributing 48.41%.

The agricultural, forestry, and fisheries sector was particularly impacted by Typhoon No. 3 in September 2024, resulting in slower growth compared to previous years. The sector’s value-added in the first nine months of 2024 grew by 3.20%, marking only a marginal improvement over the same period in 2020, the lowest growth in the 2020-2024 period. Within this sector, agriculture grew by 2.92%, contributing 0.25 percentage points to the overall economic growth. Forestry saw a 4.96% increase, although its low share contributed just 0.03 percentage points. Fisheries grew by 3.73%, contributing 0.10 percentage points.

In the industrial and construction sector, many key industries posted robust growth compared to the same period last year. The industrial sector’s value-added for the first nine months of 2024 increased by 8.34%, contributing 2.71 percentage points to overall GDP growth. The manufacturing sector, the main driver of this growth, expanded by 9.76%, contributing 2.44 percentage points. The construction sector also saw a 7.48% increase, contributing 0.52 percentage points.

The trade, tourism, and transportation sectors continued to flourish, providing positive contributions to the overall economy. The service sector’s value-added in the first nine months of 2024 increased by 6.95%. Key service industries with significant contributions to GDP growth include wholesale and retail, which grew by 7.56%, contributing 0.78 percentage points; transportation and warehousing, which grew by 11.03%, contributing 0.70 percentage points; finance, banking, and insurance, which increased by 6.47%, contributing 0.38 percentage points; and accommodation and food services, which grew by 9.48%, contributing 0.26 percentage points.

As of the first nine months of 2024, the economic structure comprised 11.64% from agriculture, forestry, and fisheries; 37.10% from industry and construction; 42.80% from services; and 8.46% from product taxes minus subsidies. This compares to the same period in 2023, when these figures were 11.80%, 36.98%, 42.61%, and 8.61%, respectively.

Regarding GDP usage for the first nine months of 2024, final consumption grew by 6.18%, contributing 62.66% to the overall growth, while gross capital formation rose by 6.86%, contributing 36.68%. Exports of goods and services grew by 16.94%, and imports increased by 17.05%, with the trade balance contributing 0.66% to GDP growth.

2. Industrial Production

The industrial sector posted a 9-month growth of 8.34% in 2024, with first-quarter growth at 6.47%, second-quarter growth at 8.78%, and third-quarter growth at 9.59%. Manufacturing led the way, expanding by 9.76% (7.21% in Q1, 10.39% in Q2, and 11.41% in Q3), contributing 2.44 percentage points to GDP growth. The electricity production and distribution sector grew by 11.11%, contributing 0.43 percentage points, while water supply, waste treatment, and waste management grew by 9.83%, contributing 0.06 percentage points. In contrast, the mining sector contracted by 7.01%, pulling down overall growth by 0.22 percentage points.

The industrial production index for the first nine months of 2024 rose in 60 provinces and fell in three provinces nationwide. The consumption index of the manufacturing industry decreased by 2.1% in September 2024 compared to the previous month but increased by 12.7% year-on-year. Overall, the 9-month consumption index for manufacturing rose by 12.5%, compared to a modest 0.6% increase in the same period in 2023.

The inventory index for the manufacturing industry at the end of September 2024 increased by 5.2% compared to the end of August and by 8.5% compared to the same period last year. The average inventory rate for the first nine months of 2024 stood at 76.8%, compared to 85.3% in the same period of 2023.

As of September 1, 2024, the number of workers in industrial enterprises increased by 1.1% compared to August 2024 and by 5.2% year-on-year.

3. Business Registration

In September 2024, the country saw the establishment of 11.2 thousand new enterprises, marking a 16.3% decrease from the previous month and a 5.0% year-on-year decline. Meanwhile, nearly 6.5 thousand businesses resumed operations, down 23.7% month-on-month but up 11.6% year-on-year. Additionally, 4,233 enterprises registered for temporary suspension of business, down 20.6% month-on-month but up 2.6% year-on-year. Furthermore, 7,410 businesses ceased operations to await dissolution, an increase of 43.6% month-on-month and 40.5% year-on-year. A total of 1,605 enterprises completed dissolution procedures, down 16.7% from the previous month but up 26.8% year-on-year.

For the first nine months of 2024, more than 183,000 enterprises were either newly registered or resumed operations, representing a 9.7% increase compared to the same period in 2023. On average, more than 20.3 thousand businesses were established or resumed operations each month. However, the number of businesses exiting the market also rose, with 163.8 thousand businesses withdrawing, an increase of 21.5% compared to the same period in 2023, averaging 18.2 thousand businesses exiting per month.

A business sentiment survey of the manufacturing sector in Q3 2024 revealed that 34.7% of businesses reported better business conditions than in Q2, while 42.6% reported stable conditions, and 22.7% reported difficulties. Looking ahead to Q4 2024, 42.2% of businesses anticipate improved conditions, 40.4% expect stability, and 17.4% forecast worsening conditions.

4. Investment

Total social investment capital realized in Q3 2024 is estimated at VND 966.7 trillion, reflecting a 7.0% year-on-year increase. For the first nine months of 2024, total social investment capital reached VND 2,417.2 trillion, up 6.8% year-on-year.

As of September 30, 2024, total registered foreign direct investment (FDI) into Vietnam, including new capital, capital adjustments, and share purchases by foreign investors, amounted to USD 24.78 billion, an 11.6% increase year-on-year.

FDI disbursements in Vietnam during the first nine months of 2024 reached USD 17.34 billion, up 8.9% year-on-year.

Vietnamese investment abroad during the same period included 105 newly approved projects, with total Vietnamese capital amounting to USD 177.5 million, a 27.5% decline year-on-year. Additionally, there were 20 capital adjustments with a total value of USD 12.0 million, a sharp 93.0% decline. Overall, total Vietnamese investment abroad (including new and adjusted capital) in the first nine months of 2024 amounted to USD 189.6 million, down 54.5% year-on-year.

5. Retail Sales of Consumer Goods and Services

In September 2024, the total retail sales of goods and revenue from consumer services at current prices reached VND 535.8 trillion, up 7.6% year-on-year. Revenue from food and beverages increased by 10.6%, and the accommodation and catering services sector grew by 7.9%. For Q3 2024, total retail sales of goods and consumer services reached VND 1,591.0 trillion, a 1.7% increase compared to the previous quarter and an 11.5% year-on-year rise.

Source: GSO

Compiled by Vietnam Business Information