2024 Vietnam economic outlook

The 2024 Vietnam economic outlook herein provides a short update on Vietnam’s economic progress year-to-date June 2024.

Key areas covered are Vietnam macroeconomic indicators, Vietnam export demand, Vietnam purchasing managers index, Vietnam consumer demand, Vietnam shopper thrifty behavioural changes, Vietnam retail sales and Vietnam tourist arrivals. Cimigo discusses forecasts for the 2024 full year and expectations for the year ahead are discussed.

2024 Vietnam economic outlook

Vietnam economic outlook 2024

Expect continued volatility for business and manufacturing

Vietnam’s GDP 2024 growth jumps to 6.9% in Q2. Vietnam’s GDP 2024 grew by 6.9% in the second quarter compared with the same period in 2023.

Vietnam’s economy displayed a stark contrast between impressive headline GDP growth and underlying sectoral volatility.

The Vietnam Manufacturing Purchasing Managers Index (conducted by Cimigo and compiled by S&P Global) saw the sharpest increase in new business since March 2011. Foreign direct investment, industrial production, exports and a substantial trade surplus bode well for the economy.

Cimigo expects continued volatility in 2024 until the second half of 2026, exacerbated by delays in government approvals that are unlikely to be resolved before the next national assembly election, expected in May 2026. This bureaucratic stagnation impedes infrastructure spending, a crucial growth driver.

Consequently, Cimigo‘s Vietnam GDP 2024 growth forecast remains a cautious 5.7%.

Vietnam consumer retail sales are muted

Muted consumer demand presents a challenge. Retail sales growth remains sluggish, lagging other economic indicators. This can be attributed to a shift in consumer behaviour towards thrift. Consumers prioritise value and delay high-ticket purchases, impacting discretionary spending and essential goods.

Retail expenditure growth, which contributes 55% of the economy, remains sluggish. Sales of goods and services increased by only 2.7% by YTD June 2024 over the same period last year.

Sales of retail goods increased by only 0.9% by YTD June 2024. Sales of retail services increased by 9.5% by YTD June 2024, buoyed by a massive increase in the number of inbound tourists to 8,832,271 as of YTD June 2024 (a 58% increase compared with 5,574,969 YTD June 2023).

The recent increase in exports and improvement in manufacturing is expected to trickle down to improved consumer retail expenditure in the second half of 2024. However, we expect continued volatility in retail sales.