Vietnam is well-positioned to capture an increased share of global production and exports, as it is well integrated with global trade after signing multiple free-trade agreements (FTAs), CEO and head of Banking and Coverage of Standard Chartered Bank Vietnam Nguyen Thuy Hanh stated while interviewed by the Vietnam Government Portal.

The interview was published by the Government News on December 28.

Looking at Vietnam's economic performance in 2024, Ms. Hanh remarked that the manufacturing sector has experienced solid growth, and relatively accommodative monetary policy may have also contributed to the economic recovery. However, Standard Chartered remains cautious on Vietnamese economy near-term given the recent moderation in macroeconomic data.

Referring to the highlight of Vietnam's economy over the past year, she said, year-to-date credit growth was at 16.6 per cent as of November 30, higher than the 2013-2023 average (around 14.4 percent).

On the trade front, exports grew 11.4 per cent in the first 11 months of 2024, while imports rose 16.4 per cent; with electronics exports and imports continuing their recovery.

Foreign direct investment (FDI) appetite remains strong, as indicated by inward FDI flows. Disbursed FDI increased by 7.1 per cent in over the last 11 months of the year, while pledged FDI rose by 1 per cent, according to Ms. Hanh.

Vietnam should diversify its economy away from manufacturing, she suggested.

Regarding Vietnam's economic prospects in 2025, she said, Standard Chartered forecasts strong GDP growth of 6.7 per cent for Vietnam in 2025, with growth easing from 7.5 per cent in the first half to 6.1 per cent in second half.

"We expect increased business activity in 2025 and beyond, with foreign investment supporting growth," she shared.

She spoke highly of the government's aims to promote new economic drivers, such as digital transformation, the green transition and the circular economy.

To foster sustainable medium-term growth, Vietnam needs to step up its preparedness for natural disasters, diversify its economy away from manufacturing and expand its FDI sources away from Asia, Ms. Hanh suggested.

Diversifying investment sources and enhancing the business environment will be critical for Vietnam to realize its potential and accelerate economic development in 2025, she noted.

According to her, the recent U.S. Federal Reserve System (FED) rate cuts were expected to support Asian currencies, including the VND. However, stronger-than-anticipated U.S. economic data has led to a less supportive environment for Asian FX markets. Trade policy uncertainties and inflation-inducing measures under Trump could further complicate currency stability in the region.

"We expect the State Bank of Viet Nam (SBV) to hike rates by 50bps in the second quarter of 2025. The government's desire for stronger economic growth may support low interest rates for now", she told the Government Portal.

Vietnam's balance of payments (BoP) is driven largely by goods trade and FDI; external-sector performance has stayed relatively solid, she remarked, adding that an upward reversal in commodity prices would pose a risk to the external outlook.

Lower USD rates may help to reduce capital outflows, while a sustained trade surplus and strong tourism should support the VND, she noted.