World Bank Projects Viet Nam's Economic Growth to Rebound in 2024, Urges Capital Market Development

"An upgrade to Emerging Market status could channel billions of dollars of global investment into Viet Nam’s capital markets," said Ketut Ariadi Kusuma, World Bank Senior Financial Sector Specialist.

Viet Nam’s economy is expected to experience a significant rebound in 2024, driven by a resurgence in manufactured exports, tourism, and a recovery in consumption and business investment, according to a new World Bank report.

The latest "Taking Stock" report from the World Bank forecasts Viet Nam's economy to grow by 6.1 percent in 2024, followed by growth of 6.5 percent in both 2025 and 2026, up from the 5 percent growth seen last year. The report emphasizes the resilience of Viet Nam's economy in the face of rising global challenges but notes that the country has not yet returned to its pre-pandemic growth trajectory.

Titled "Reaching New Heights in Capital Markets," the report suggests that enhanced public investment could provide a short-term stimulus while addressing emerging infrastructure gaps in areas such as energy, transport, and logistics, which are increasingly becoming constraints on growth. However, the report also cautions that the quality of bank assets remains a concern due to rising non-performing loans (NPLs), and urges authorities to monitor these risks closely.

"Viet Nam’s economy benefited from the rebound in export demand during the first half of the year," said Sebastian Eckardt, World Bank East Asia and Pacific Practice Manager for Macroeconomics, Trade, and Investment. "To maintain growth momentum for the rest of the year and in the medium term, the authorities should deepen structural reforms, increase public investment, and carefully manage emerging financial risks."

The report also underscores the importance of developing Viet Nam's capital markets as a vital source of long-term funding to help the country achieve its goal of becoming a high-income nation by 2045. Key challenges highlighted in the report include the underdevelopment of the institutional investor base and the underutilization of the Viet Nam Social Security fund (VSS).

A stronger policy framework that leverages VSS as a driver of capital market development is recommended. Policies that could lead to Viet Nam's reclassification from Frontier Market to Emerging Market status would attract more foreign investors, along with reforms to improve market transparency and investor protection. Effective coordination among financial regulators is deemed crucial for achieving these objectives.

"An upgrade to Emerging Market status could channel billions of dollars of global investment into Viet Nam’s capital markets," said Ketut Ariadi Kusuma, World Bank Senior Financial Sector Specialist. "At the same time, gradually diversifying VSS investments is key not only to enhancing long-term returns but also to fueling Viet Nam’s economic growth through investments in the corporate sector."

The "Taking Stock" report is the World Bank’s bi-annual economic report on Viet Nam.