HANOI (Bloomberg): Vietnam’s parliament has set an economic growth target of 6.5%-7% for next year, but will aim to push that higher, as the country continues to power ahead as one of South-East Asia’s fastest-growing economies.
The National Assembly approved the government’s 2025 economic plan on Tuesday, which also says the nation will "strive” to hit 7-7.5% growth. It puts the inflation goal at about 4.5% on average and set manufacturing at around 24.1% of GDP.
One of the biggest uncertainties facing Vietnam’s government and its growth goals is what action on trade and tariffs the incoming US administration will take.
President-elect Donald Trump has threatened tariffs of as much as 60% on Chinese goods in his second presidency, and duties of up to 20% for all imports from other countries.
"Trump’s election win spells weaker growth prospects for most of South-East Asia in 2025,” according to Tamara Mast Henderson from Bloomberg Economics.
"The current trajectory for South-East Asia’s exports looks intact for next year. But uncertainty over tariffs is likely to stunt capital spending. Investment is more prone to stall in economies that are more vulnerable to tariffs - Vietnam and, to a lesser extent, Thailand,” she notes.
The government will also "drastically” push for 7% growth in 2024 and vowed to speed up the disbursement of public investment, which is far behind the year’s target.
Spending for the first ten months of 2024 stood at just 52.29% of this year’s planned investment, according to a government statement on Friday.
Prime Minister Pham Minh Chinh said this is due to a combination of factors including a lack of coordination among government agencies, and officials being afraid to take responsibility for their actions.
The State Bank of Vietnam also stands ready to respond after Trump’s win fueled a dollar rally that’s pummeled emerging markets. The central bank reiterated that it’s willing to sell US dollars to keep the dong stable in the local money market.
The dong has slumped more than 4% against the dollar this year, on track for its worst annual performance since 2015.
-- ©2024 Bloomberg L.P.
