Vietnam’s gross domestic product (GDP) growth may slow down to 4.7 percent this year but is expected to bounce back and hit 6.5 percent in 2024, according to a forecast by VinaCapital, a Vietnamese investment management and real estate firm.

Michael Kokalari, a chartered financial analyst (CFA) and Chief Economist at Ho Chi Minh City-based VinaCapital, released the projections in a report on Tuesday.

The expert mainly blamed the economic slowdown in 2023 on the global market shrinking, which has resulted in a decrease in Vietnamese exports.

Accordingly, Vietnam would see its economic growth drop from 8 percent in 2022 to 4.7 percent this year, mainly due to the decline in exports and production as a result of the reduced worldwide demand for “Made in Vietnam” products.

Over the first nine months of 2023, Vietnam’s exports slumped by nearly 10 percent from a year earlier as exports to the U.S., its largest export market, nosedived by nearly 20 percent.

In the period, domestic consumption growth was almost unchanged year on year, compared to the pre-pandemic growth rate of 8-9 percent, while market trends were impacted by ongoing challenges in the real estate market.

Meanwhile, foreign tourist arrivals have recovered to nearly 70 percent of pre-COVID-19 levels this year, contributing to fueling GDP growth in 2023.

Kokalari predicted that Vietnam’s exports will recover in the near future, helping the Southeast Asian country's GDP growth rebound to 6.5 percent in 2024.

An export rebound will be accompanied by a likely revival of Vietnam's manufacturing output, which is projected to grow to a zero rate so far this year to an 8-9 percent growth in 2024 – lower than the pre-pandemic 12-per-cent average.

Such a recovery is anticipated in the context that U.S. retail inventories have begun to decline after a year of stagnation due to slowing purchasing power. That means Vietnamese manufacturers will receive more orders again from the U.S. soon.

The chief economist also emphasized that the comprehensive strategic partnership recently set up between Vietnam and the U.S. has created an important turning point, making a new period of development for Vietnam in the coming time. 

Motivated by the newly upgraded Vietnam-U.S. relationship, more and more U.S. investment will be poured into Vietnam, where American investors currently account for only three percent of the country’s total foreign direct investment, the expert stated.

The upcoming wave of U.S. investment in Vietnam is expected to focus on high-tech industries, including semiconductor devices, based on many agreements reached during U.S. President Biden's visit to Vietnam last month, Kokalari added.

VinaCapital’s 2023 GDP growth forecast for Vietnam is lower than the expected rate of over 5 percent as set out in the Vietnamese government’s report presented by Prime Minister Pham Minh Chinh to the National Assembly on Monday.

According to the report, this estimated growth will not meet the target of 6.5 percent but is quite high compared to those projected for many other countries in the region and the world.

The government also expected a GDP growth of up to 6.5 percent for the nation in 2024, the same as VinaCapita’s projection. 

Two months ago, the World Bank released a report forecasting that Vietnam’s economy in 2023 will grow by 4.7% -- the same rate forecast by VinaCapital -- and will recover to 5.4 percent and 6 percent in 2024 and 2025, respectively.

In its latest macro-economic updates about Vietnam released on Monday, UK-based Standard Chartered Bank maintained a strong 2024 GDP growth forecast of 6.7 percent for Vietnam but lowered its prediction for the Southeast Asian nation’s 2023 economic expansion to 5 percent from the previous 5.4 percent.

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