Vietnam's economy outperformed expectations in the fourth quarter with a 6.72% GDP growth compared to the anticipated 6%, marking an increase from the previous quarter's 5.33%. Detailed insights reveal:
- Manufacturing output in Q4 grew by 7.97%, with an annual increase of 3.62%.
- The service sector expanded by 7.29% in Q4, culminating in a 6.82% rise for the year.
- Agricultural output saw a 4.13% increase in Q4, with an annual growth of 3.83%.
- The year witnessed a 3.5% hike in disbursed foreign direct investment (FDI), touching $23.18 billion, the highest since 2019. Committed FDI by December 20 soared by 32.1% to approximately $36.6 billion.
Analysts attribute this robust growth to improved exports and manufacturing, as well as investment expansion. Vietnam's export value, nearly equivalent to its GDP, indicates a recovery from the global demand slump due to high interest rates.
This quarter marks the first quarterly export rise in five years, with retail growth towards the year-end signaling a resurgence in domestic consumption. December exports grew by 13.1%, surpassing the 8.2% expectation, while imports increased by 12.3%, higher than the anticipated 6.5%.
Earlier in the year, Vietnam's economic growth fell short of expectations due to weakened exports from global demand downturn and a sluggish real estate sector. From January to March, exports dropped by 11.9%, and the country saw the closure of 42,900 businesses. The first quarter recorded a GDP growth of 3.32%, the second lowest in twelve years, mirroring the severity of the early pandemic phase.
The latter half of 2023, however, offered a more favorable external environment as inflation rates in Europe and the U.S. began to decline, aiding Vietnam's recovery.
Investment interest in Vietnam remains strong, with many companies outlining specific expansion plans. The country's role as a major exporter of electronics and textiles is pivotal. Maintaining export competitiveness and attracting FDI is crucial for Vietnam, an export-driven economy.
Reports highlight that foreign investors have poured over $450 billion into Vietnam to date, surpassing its annual GDP. In recent years, FDI has continuously hit new records, with prominent tech companies and manufacturers like Apple and Sony expanding their operations in the country.
The U.S. and China remain Vietnam's largest and second-largest export markets, respectively, accounting for 45% of Vietnam's total exports. While a potential mild recession in the U.S. next year may pose challenges, analysts from UBS predict a rebound in Vietnam's economic growth in 2024 with an estimated GDP increase of 6.4%, expecting a more robust recovery by 2025.
