# Vietnam: Recalibrating the Policy Mix to Enhance Economic Recovery

- Link: https://www.thailand-business-news.com/asean/vietnam/167795-vietnam-recalibrating-the-policy-mix-to-enhance-economic-recovery
- Published: 2024-10-15T08:35:00+07:00
- Author: News Desk

Vietnam’s economy is set to grow 6.2% in 2024, driven by exports and FDI, despite
weak household spending and MSMEs.

## Key takeaways

 * Vietnam’s economy is projected to grow by 6.2% in 2024, driven by exports and
   FDI, but household spending and MSMEs remain weak.
 * Persistent export demand supports growth, but global economic downturns and financial
   stability concerns pose risks.
 * Enhancing economic resilience requires fiscal support for public investment, 
   monetary policy reforms, and stronger financial regulations.

## Economic resilience amid challenges

In 2024, Vietnam’s [economy](https://amro-asia.org/vietnam-recalibrate-policy-mix-to-broaden-economic-recovery)
is set to grow robustly by 6.2% due to an upswing in export demand and increased
foreign direct investments, as noted by the ASEAN+3 Macroeconomic Research Office(
AMRO). Nevertheless, household spending remains subdued, and micro, small, and medium
enterprises (MSMEs) are yet to catch up. Compounded by the destruction from Super
Typhoon Yagi in the north, these challenges suggest macroeconomic policies should
be adjusted to bolster domestic economic activities and protect vulnerable sectors.

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## Risks and prospects

AMRO’s recent consultation in Vietnam highlighted both growth opportunities and 
vulnerabilities. Persistent export demand is expected to support growth despite 
the temporary setbacks from the typhoon. However, risks include potential shocks
from global economic downturns, particularly in the U.S., Europe, and China, which
could hamper Vietnam’s export recovery. Financial stability concerns prevail as 
credit risks increase and the real estate sector faces hurdles due to new regulatory
implementations and poor credit quality.

## Policy directions and future challenges

To enhance economic resilience, Vietnam possesses the fiscal capacity to support
public investment and aid vulnerable segments. Improving tax collection and streamlining
public investment laws are crucial. A market-based interest rate system and greater
exchange rate flexibility are recommended for monetary policy reforms.

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Strengthening financial regulations, particularly in real estate, and boosting commercial
banking soundness are key. Attention to infrastructure, education, and cyber security,
coupled with strong climate change policy coordination, will be vital as Vietnam
navigates rapid growth and an aging population.