The World Bank: Vietnam economy is expected to grow strongly over the next 2 years

FDI inflow is projected to remain stable

According to the WB, Vietnam's economic growth in 2024 is supported by the recovery of exports, driven by increased global demand for technology products. However, the growth momentum is expected to slow down this year.

Major risks to the growth prospects encompass weaker-than-anticipated global growth and trade interruptions, especially among Vietnam's key trade partners.

Foreign Direct Investment (FDI) inflow is projected to remain stable at around US$25 billion (disbursement), It reflects Vietnam's continued attractiveness to global investors. Increased public investment and the rapid recovery of the real estate market, facilitated by accelerated land clearance, could support domestic demand and partially offset external risks.

To cope with increasing uncertainties, the report recommends strategies to sustain growth, including: strengthening public investment, addressing vulnerabilities in the financial sector, enhancing the resilience of the energy sector, and accelerating structural reforms.

World Bank Country Director for Vietnam, Cambodia, and Laos, Mariam J. Sherman, said:

“Over the next two years, Vietnam's economy is projected to continue its strong growth momentum. However, Vietnam could utilize its fiscal space to better prepare for heightened uncertainties”.
Public investment drives growth, especially in urban infrastructure, transportation, and energy, which will be crucial, provided that the authorities can scale up public investment and ensure efficient spending," Director Sherman affirmed.

Transitioning to electric vehicles is a significant step

Vietnam has established ambitious goals concerning economy-wide decarbonization by 2050. Following Prime Minister Pham Minh Chinh's commitment at the 2021 United Nations Climate Change Conference (COP26) to economy-wide net-zero emissions by 2050, các kế hoạch cắt giảm khí thải carbon trong lĩnh vực giao thông vận tải đã được triển khai.Carbon emission reduction plans in the transportation sector have been implemented.

In 2021, emissions from the transportation sector amounted to 32.9 million tonnes of CO2 equivalent (CO2e), representing 7.2% of the nation’s total greenhouse gas emissions. To achieve net-zero emissions by 2050, Vietnam will need to prioritize vehicle electrification.

Transitioning to electric vehicles (EVs) could help reduce net emissions by 2.2 million tonnes of CO2 by 2050, even with the current electricity grid. Simultaneously, this transition could also generate up to 6.5 million jobs by 2050, particularly in battery manufacturing and charging infrastructure development.

To accelerate EV adoption in the two-wheeler segment, the report recommends implementing robust safety standards, encouraging the use of high-performance batteries, expanding charging and battery swapping stations, and simultaneously offering financial incentives to offset upfront costs

To lay the groundwork for large-scale electric vehicle adoption projected beyond 2035, Vietnam needs to prepare its power system to meet increasing electricity demand and establish a fast-charging network within the next decade.