Vietnam is entering a new era of growth, Dr. Le Anh Tuan, Chief Investment Officer of Dragon Capital, confirmed at the Investor Day 2025 event organized by Dragon Capital recently.

Drivers for double-digit growth

Looking back at the 2024 macro economy, Mr. Tuan assessed that Vietnam has built a stable foundation with many bright spots.

Specifically, in 2024, GDP grew by 7.09 per cent. In particular, inflation - a major concern for many countries - is still being controlled stably in Vietnam.

Regarding credit, 2023 recorded low growth in the first quarters and a strong breakthrough at the end of the year. However, entering 2024, credit maintained a more stable growth rate, reflecting more flexible and effective management of monetary and fiscal policies.

On the other hand, President-elect Donald Trump's return to the White House has put pressure on the VND. The USD index (DXY) increased sharply from 101 to 109, significantly affecting domestic monetary policy.

“GDP growth has reached a positive level, along with positive factors that help the Government confidently set a high growth target of 8-10 per cent by 2025,” said Mr. Tuan. “This target is based on three main components: import and export, domestic consumption and investment.”

According to Dragon Capital's analysis, in terms of import and export, during the Trump 1.0 period, Vietnam's export turnover to the US skyrocketed. However, with Trump 2.0, the situation is still unclear.

Mr. Tuan said that import and export face many challenges to create a major breakthrough. The total global trade in goods is forecast to grow by only 2-3 per cent in 2025 while 60 per cent of Vietnam's main export markets are expected to face difficulties. However, according to Mr. Tuan, the trade balance may decrease slightly, but the import and export component will still contribute positively to GDP.

Regarding the investment, with a contribution rate of 31-32 per cent to GDP, investment is an important factor.  Attention should be paid to the ICOR (Incremental Capital - Output Ratio) index, which measures investment capital efficiency. When this index increases, it shows that the economy depends on investment capital, so it is necessary to focus on the quality of investment projects, avoiding the situation of scattered and ineffective investment like in the previous period, when the ICOR reached 41 per cent.

Looking back at economic growth in the period 1992-1997, Vietnam achieved an impressive GDP growth rate of 8-9 per cent, thanks to strong steps in economic reform. Mr. Tuan emphasized that lessons from countries such as Japan, South Korea and China - where GDP once increased by an average of over 10 per cent - show that their ICOR index fluctuates from 3-4. To achieve the high growth target set by Vietnam, the ICOR also needs to be in the range of 2-4.

“Investment must go hand in hand with a low ICOR,” Mr. Tuan affirmed. “Accordingly, it is necessary to increase investment quality, focus on projects with high economic efficiency, avoid spreading investment; strengthen project management to reduce loss, waste and ensure construction progress; develop human resources; apply high technology.”

Regarding fiscal policy, Mr. Tuan believes that the Government will continue to accelerate public investment disbursement. According to Dragon Capital's statistics, the Metro project is a typical example, and there are many projects that can surprise us in terms of progress such as the Long Thanh Intẻnational Airport project, which was previously thought to be completed in 2027, but is currently ahead of schedule, expected to be 6 months faster. Or Tan Son Nhat International Airport's Terminal 3 (T3) project is expected to be put into operation before April 30; The 519-km Quang Trach - Pho Noi 500kV circuit 3 power transmission line has been completed at a remarkable speed, after over 6 months of construction. In particular, the projected North-South high-speed railway will greatly affect consumption, real estate, investment, thereby affecting GDP in general.

Mr. Tuan emphasized that public investment not only plays a leading role but also has the ability to lead the private sector to participate more strongly in the economy. “There will be breakthroughs in public investment in 2025, especially in the second half of 2025, thereby unblocking the flow of private investment capital that has stagnated in the past 3 years,” he shared.

Finally, in the GDP component, domestic consumption plays an important role, needs to be maintained and growth increased, especially after positive signs of recovery from the pandemic, but there has not been a breakthrough yet. “Therefore, consumption needs a boost to explode,” Mr. Tuan said.

Dragon Capital experts affirmed that with just an average consumption growth rate of 10-12 per cent, combined with the increase in investment, the economy can completely achieve a double-digit GDP growth rate.

Two scenarios for Vietnam's economic growth in 2025

Based on macroeconomic factors and international policies, Dragon Capital proposes two economic growth scenarios for Vietnam in 2025.

With scenario 1, if the US trade policy is too tough and monetary policy is adjusted from moderate to slightly tightening (+150 basis points), GDP growth is expected to be difficult to break out, only about 6.5-7 per cent.

With scenario 2, if US policies are adjusted more targetedly and selectively, while monetary policy remains flexible (+/- 75 basis points), the economy can achieve high growth of 7.5-9 per cent.

Regarding corporate profits, Dragon Capital also forecasts three growth scenarios. First, if trade protectionism occurs, corporate profits in 2025 will only increase by 5-8 per cent. When the world economy slows down significantly due to the impact of the trade war, the Fed's interest rate cutting cycle is delayed, causing pressure.

Second, in the case that the global economy slows down but avoids recession, the obstacles in the Vietnamese real estate sector are resolved, helping banks confidently disburse credit, thereby improving personal consumption, in the baseline scenario, corporate profits can increase by 15-17 per cent.

Third, in the scenario where public investment creates real momentum and confidence for the private economic sector, fiscal stimulus, corporate profit growth can exceed 18-25 per cent.

“With positive expectations from economic growth and strong movements of macro factors, Vietnam is facing the opportunity to enter a potential investment cycle,” Mr. Tuan believes. “This will be a strong breakthrough period of the economy, promising to bring many breakthroughs in the future.”