Vietnam: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vietnam

The 2024 Article IV Consultation discusses that in the challenging year of 2023, the Vietnamese economy grew by 5 percent thanks to determined actions by the government. The economy was hit by turbulence in the real estate sector, financial distress, and a significant drop in exports. Economic growth is projected to recover to 6.1 percent in 2024, supported by continued strong external demand, resilient foreign direct investment, and accommodative policies. Domestic demand growth is expected to recover gradually as corporates navigate through high debt levels while the real estate sector will only fully recover over the medium term. Inflation is expected to hover around the State Bank of Vietnam’s target of 4–4.5 percent in the year of 2024. The fiscal stimulus is helping sustain domestic demand, including investment, which facilitates private sector deleveraging. However, fiscal support may need to be scaled down if there was a large inflation surprise. An upgraded fiscal framework would help improve public policies and manage challenges ahead. Sustaining high medium-term economic growth, amidst demographic and climate headwinds, requires broader structural reforms to boost productivity, address climate challenges, and strengthen governance.