The World Bank recently released the 'Taking Stock' report, which reviews Việt Nam's economic achievements in 2024 and provides forecasts and analysis for the country's growth this year. Sacha Dray, a World Bank economist and co-author of the report, speaks to the media about the factors that may drive or hinder the growth.

Sacha Dray, an economist at World Bank Việt Nam, co-author of the report 'Taking Stock: Electrifying Journeys – E-mobility Transition in Viet Nam' released in mid-March. — VNS Photo Bảo Hoa

What is the World Bank's outlook for Việt Nam's economic growth this year?

Việt Nam had a very strong growth performance last year in 2024, but in 2025 we expect part of this large rebound in exports to slow down. Our forecast is that GDP growth in Việt Nam will reach 6.8 per cent in 2025 and 6.5 per cent in 2026. This reflects in the stored export growth, stored external demand that will be partially offset by a recovery in private consumption that has started at the end of 2024, and should continue as the real estate market continues to recover.

What are the biggest uncertainties that may affect the growth?

The uncertainties this year are significant, especially from the evolving global context. We have highlighted three major ones. The first one is an escalation of trade distorting policies, which includes tariffs and any other measures that might increase the cost of trade. They have increased the region and are set to escalate further. That will impact exports – which means that stored export growth will slow down – and impact Việt Nam and the region overall.

The second risk is a slowdown in growth of Việt Nam's major trade partner, which is partly due to the aforementioned trade disruptions but also a slowdown that we had expected to materialise this year, which, again, will mean lower external demand for the year.

The third risk is on the domestic side, which is that a slower recovery of the real estate market that has started at the end of 2024 might take more time, as the new three reconnecting laws on land, real estate, and social housing may take more time to be operationalised.

How would the Government's raised GDP growth target of 8 per cent add pressure to inflation control?

To reach the ambitious target requires a set of supporting policies to enable the domestic and global environments. In terms of the global environment, this will require a higher export growth, but a small impact of the trade distorting measures is starting to materialise now. Domestically, the focus should be on policies to increase public investment – not just the level, but also the quality of public investment towards productive use, such as increasing transport infrastructure, improving the distribution of electricity and connectivity overall. So those public investments will be an important driver of growth. But there is a trade-off that if public investment were to rise too high compared to the potential of the economy, it might create inflation in the near term, and that should be closely monitored.

There is an increasing need for further public investment to improve infrastructure and other improvements on the asset stock in Việt Nam, and there is fiscal space to do that – to mobilise those resources – as Việt Nam has currently a balance in its public finances and has a very low and declining level of public debt.

Domestic consumption, which is the consumption of households here in Việt Nam, has grown, but it remains not as dynamic as what we have seen in export and manufacturing. It's a very moderate driver of economic activity. It has declined in Việt Nam, and it's low by regional standards. So increasing public investment will help step up the role of private consumption in Việt Nam, and there is room to leverage the very large domestic market that Việt Nam has given its large population and the expanding middle class. — VNS