Vietnam's 6.42% Growth in H1: Economic Recovery Signs?
According to the latest data released by the General Statistics Office of Vietnam, in the first half of 2024, Vietnam's Gross Domestic Product (GDP) grew by 6.42%, showing an increased growth rate and a commendable achievement compared to recent years.
In the first half of the year, China continued to be Vietnam's largest source of imports, and the United States remained the largest destination for Vietnam's exports. According to data released by the General Administration of Customs at the end of 2023, in the trade between China and Vietnam, the import and export of intermediate products between the two countries accounted for nearly 70%.
Vietnamese Prime Minister Pham Minh Chinh stated on June 25th at the 15th Summer Davos Forum that China's development has also brought many business opportunities to countries like Vietnam. China has taken on an important role in addressing various regional and global issues and plays a significant part in the world's industrial and value chains.
Zhou Shixin, Director of the Southeast Asia Research Center at the Shanghai Institute for International Studies, told Yicai Global that China and Vietnam have a strong economic complementarity. Vietnam greatly needs China in the upstream of the production and industrial chains, driving the trade volume to continuously reach new levels. Currently, cooperation between the two countries in the field of high-tech is deepening, providing a broader space for economic cooperation.
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Vietnam's Export Recovery
The momentum of Vietnam's economic recovery has even exceeded the expectations of the Vietnamese government. In late June, Nguyen Duc Chinh, Director of the General Department of National Economic Integration at the Ministry of Planning and Investment, stated that based on the current trend, the growth rate for the second quarter of 2024 is expected to reach 6.2%.
However, the General Statistics Office ultimately announced a second-quarter growth rate of 6.93% year-on-year, combined with the first quarter's growth rate of 5.66%, resulting in a 6.42% GDP increase for Vietnam in the first half of the year. From 2020 to 2024 after the pandemic, this figure is only lower than the 6.58% in the first half of 2022, ranking second.
As a typical export-oriented economy, the previous global demand weakness had a significant impact on Vietnam's exports. Entering 2024, the demand from Vietnam's main trading partners such as the United States, South Korea, and Japan has warmed up, stimulating Vietnam's economy.
Gao Youxiao, General Manager of the Vietnam Textile and Garment Group (Vinatex), revealed that compared to the same period in 2023, orders began to increase at the beginning of 2024. Most of the clothing companies under the group have sufficient orders before October and are negotiating orders for the next few months.
Analyzing the growth in orders, Gao Youxiao said that the improvement in Vietnam's textile and garment exports is not due to an improvement in global textile and garment demand. Instead, there has been a certain shift of orders from other countries to Vietnam, coupled with the exchange rate advantage since the beginning of the year, which has enhanced Vietnam's competitiveness.The recovery in demand is not limited to textiles. Bui Huy Son, Director of the Planning Department of the Ministry of Industry and Trade of Vietnam, stated in late June that exports have strongly rebounded in the first half of this year, with an estimated increase of 13.8% in export value compared to the same period last year. Exports such as cameras, video cameras and components, computers, electronic products, and components have all seen growth.
Economic Trends in Vietnam
Alongside the increase in external demand, foreign investment has also accelerated into Vietnam. According to data released by the General Statistics Office of Vietnam, in the first half of 2024, Vietnam attracted nearly $15.2 billion in foreign investment, a 13.1% increase compared to the same period in 2023.
In terms of investment amount, Singapore topped the list with $5.58 billion in the first half of this year, followed by Japan with $1.73 billion. However, when calculated by the number of investment projects, China's new investment projects ranked first, accounting for 29.1% of the total foreign investment projects in Vietnam in the first half of the year.
In recent years, it has become a trend for global technology leaders to establish factories in Vietnam, bringing in capital inflows. NVIDIA's Chief Executive Officer (CEO), Jensen Huang, visited Vietnam in December last year, stating that NVIDIA has invested about $250 million in Vietnam and hopes to establish a chip production center in the country in the future, attracting talent from around the world to contribute to the development of Vietnam's semiconductor ecosystem and artificial intelligence.
Since 2016, Vietnam has maintained its position as China's largest trading partner in ASEAN. Taking the Vietnamese mobile phone manufacturing industry as an example, there has been a significant increase in demand for intermediate goods such as integrated circuits, mobile phone components, lithium-ion batteries, and liquid crystal flat panel display modules produced in China. At the same time, many Chinese companies are not satisfied with providing intermediate goods and are boldly moving southward, directly entering the Vietnamese market.
According to the Ministry of Foreign Affairs website, in October last year, Chinese Ambassador to Vietnam Xiong Bo stated that in recent years, Chinese enterprises have significantly increased their investment in Vietnam, with their share in attracting foreign investment in Vietnam rising year by year. The characteristic is the continuous improvement in the quality of investment, actively adapting to the needs of Vietnam's economic transformation and upgrading, with a significant increase in investment in high-tech, information and communication, new energy, green development, e-commerce logistics, and other fields, showing great potential.
The International Monetary Fund (IMF) stated on June 26 that, supported by strong international demand, stable foreign investment, and regulatory policies, Vietnam's economic growth rate is expected to reach nearly 6% in 2024.
However, Vietnam is not overly optimistic about the prospects for economic development. Bui Huy Son stated that in the second half of 2024, Vietnam's import and export will continue to rely on a few external markets, and geopolitical conflicts will continue to push up transportation costs. In addition, Vietnam is also concerned that products exported to major markets such as the European Union and the United States will continue to face trade barriers such as green transformation pressures.