Vietnam's economic growth forecast has been revised upward by the Asian Development Bank (ADB) to 6.4 percent for 2024 and 6.6 percent for 2025, according to the bank’s latest report.

In its newest edition of Asian Development Outlook issued on Wednesday, ADB said Vietnam is successfully taking advantage of opportunities from trade and investment to promote growth despite global challenges.

Stronger-than-expected trade, a vigorous recovery in processed and manufactured exports, and effective fiscal support measures have boosted economic growth.

“The robust rebound in export-led manufacturing and trade, bolstered by the resilient U.S. economy, is expected to continue supporting GDP growth,” the report said.

Amid growing external challenges, the bank highlighted that boosting public investment, along with supportive fiscal and monetary policies, has been essential in driving domestic demand.

In northern Vietnam, despite the severe damage caused by typhoon Yagi in September, the government’s swift response and recovery efforts helped minimize its impact on economic growth.

Based on these positive signs, ADB elevated its previous growth projections for Vietnam for 2024 and 2025 from 6 and 6.2 percent, respectively, to 6.4 and 6.6 percent.

Vietnam is showing adaptability to changes in the global supply chain, while efficiently leveraging free trade agreements to expand markets and enhance export turnovers, the bank commented.

ADB has also slightly lowered its inflation forecast for Vietnam to 3.9 percent for 2024, “notwithstanding the upward adjustments in government-controlled prices of education and healthcare, along with rising wages earlier in the year.”

The bank believes that the country, with its “prudent and flexible monetary policy, combined with subdued global oil prices due to the global economic slowdown,” will likely keep inflation in check at four percent next year.

Along with Vietnam, ADB has also raised its 2024 GDP growth forecast for Southeast Asia by 0.2 percentage points to 4.7 percent, while maintaining the 4.7 percent growth projection for the region in 2025. 

For the Asia-Pacific region, economic growth is expected to remain stable in 2024 and 2025, but the long-term outlook may be impacted by expected U.S. policy changes under the incoming administration of President-elect Donald Trump, according to the report. 

Specifically, changes to U.S. trade, fiscal, and immigration policies could diminish growth and raise inflation in developing Asia and the Pacific.

However, because these major policy changes are expected to take time and be gradually implemented, the impacts on the region would most likely happen from 2026.

In addition, heightened geopolitical tensions and continued property market fragility in China also pose risks to the region’s growth and inflation outlook.

ADB projected that under a high-risk scenario, aggressive U.S. policy changes could slightly reduce global economic growth over the next four years, with a cumulative decline of 0.5 percentage points.

Nonetheless, the bank noted that even with significant U.S. policy shifts, particularly in tariffs, the impact on developing Asia and the Pacific would remain limited under this scenario.

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