As we move into 2024, Vietnam's economy is exhibiting remarkable resilience and unexpected growth, surpassing initial forecasts set by its governmentThe General Statistics Office of Vietnam announced on January 6 that the country's GDP is expected to increase by 7.09% in 2024, exceeding the earlier target of 6.5%. In light of this optimistic outlook, Vietnam aims to set a more ambitious economic growth target of over 8% for the year, a figure that is notably higher than predictions from mainstream economic institutions.

This surge in growth comes amidst rising challenges posed by global protectionism and trade barriers, particularly from the United StatesAs an export-dependent economy, Vietnam faces uncertain external conditions that could impact its growth trajectoryNevertheless, the last quarter of 2024 saw a significant push, with GDP growth reaching 7.55% year-on-year, a substantial increase from the previous quarter's rate of 7.4%. This performance positions Vietnam's overall GDP for the year at approximately $476.3 billion, a noteworthy feat given its population of just over 100 million, yielding a per capita GDP of around $4,700.

The robust growth of the Vietnamese economy is closely tied to the rebound in global market demand for its products

The Asian Development Bank, in a report from December, indicated that the stimulation of the U.Seconomy has led to a robust recovery in export-oriented manufacturing and trade, which in turn supports Vietnam’s economic growth momentumIn an impressive display of trade activity, Vietnam’s total trade volume for 2024 is expected to approach $800 billion, reflecting a 15.4% year-on-year increase, with export figures surpassing $405 billionThis surge spans various key markets and trade partners, signifying a vital aspect of Vietnam’s economic vibrancy.

Beyond trade, the tourism sector also stands out as a key driver of economic recoveryVietnam is projected to welcome 17.6 million international visitors in 2024, marking an impressive 39.5% increase compared to the previous year, only a whisker shy of 97.6% of 2019’s pre-pandemic levelsThis revival signifies a crucial resurgence in the tourism-driven economy, which significantly relies on foreign visitors.

However, 2024 is set to be a pivotal year, filled with ambitious infrastructural projects that have been long overdue

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One such project is the long-awaited North-South high-speed railway, which has been on hold for 14 years and has now been greenlit for construction expected to commence in 2027, with a target completion date of 2035. This high-speed railway will connect Hanoi and Ho Chi Minh City at speeds of up to 350 kilometers per hour, reducing travel times from 30 hours to just fiveThis transformation will facilitate travel, tourism, business interactions, and labor mobility throughout the country, effectively addressing logistical challenges arising from the surge in foreign investment and manufacturing activities.

By the end of 2024, another significant development will commence—the first standard gauge railway connecting the Vietnam-China borderPrime Minister Pham Minh Chinh reaffirmed the project’s timeline, with construction projected to begin in late 2025 and be completed by late 2030. Such infrastructure developments will contribute to enhancing Vietnam's connectivity and seamless trade links with neighboring countries.

Despite these advancements, Vietnam is grappling with its own set of challenges, particularly in the realm of energy supply

The country has experienced frequent "electricity shortages," prompting numerous factories to halt operationsIn addressing this crisis, the Vietnamese government has turned to both Laos and China for electricity importsHowever, this solution is far from sustainable in terms of long-term energy security.

In response to energy shortfalls, the long-shelved Ninh Thuan nuclear power project has been revivedInitially approved in 2009, this ambitious plan aimed to build two nuclear power plants, each equipped with two million-kilowatt reactors, in Ninh Thuan provinceHowever, the project was put on hold following the Fukushima disaster in Japan and the subsequent budgetary constraintsNow, given the pressing changes in energy demands and the global imperative for climate accountability, Vietnam is re-examining and recommencing its nuclear energy development strategyDeputy Prime Minister Nguyen Hoa Binh emphasized the aim of diversifying energy supply and enhancing energy security, thereby reducing reliance on foreign sources.

Shortly after the revival of key infrastructure projects, Vietnam caught the attention of international media once more

On December 5, 2023, Prime Minister Pham Minh Chinh was seen mingling with Nvidia CEO Jensen Huang in Hanoi’s Old Quarter, an organic moment that captured the public's imagination as they shared beers at a roadside stallThis casual encounter underscored the burgeoning relationship between Vietnam and global technology leaders, culminating in an agreement to establish artificial intelligence research and data centers in the country, which represents a significant milestone for Vietnam's aspiration to emerge as a leading R&D hub in Asia.

In September 2024, the Vietnamese government unveiled its "Semiconductor Industry Development Strategy towards 2030" and vision for 2050, a progressive approach aimed at overcoming industrial growth hurdlesNot long after the announcement, Prime Minister Pham Minh Chinh engaged in diplomatic efforts to attract major semiconductor companies to invest in Vietnam

The arrival of firms like Nvidia signifies the tangible benefits of industrial relocation, bringing capital and advanced technology, enhancing local employment, and integrating Vietnam more broadly into global supply chains while amplifying its influence within them.

Looking ahead to 2025, the foundations laid in 2024 position Vietnam for further rapid expansionThe National Assembly has set an economic growth target of 6.5% to 7% for the upcoming year; however, Prime Minister Pham Minh Chinh is confident that the economy will grow by at least 8%. The primary uncertainty looming over Vietnam's economic forecast for 2025 relates to potential shifts in U.Sgovernmental policies, with the General Statistics Office highlighting expectations for continued foreign investments.

Challenges exist as well, particularly with the looming specter of rising protectionism and trade barriers

Nguyen Thu Quynh, director of the price statistics department, expressed concerns, explaining that such developments could exacerbate inflationary pressures, slow economic growth, and increase unemployment ratesThe United States stands as Vietnam’s second-largest trading partner and its foremost export market, with primary exports including footwear, wooden furniture, machinery, and optical equipmentTrade relations have expanded rapidly, with Vietnam’s trade surplus with the U.Sexceeding $100 billion in 2024, placing it as the fourth largest trade surplus economy with the U.S., just behind China, Mexico, and the European Union.

Yet, concerns regarding tariffs are not confined to Vietnam aloneEconomists emphasize that the ASEAN region in general is apprehensive about potential escalations in U.Sprotectionist policies under a new administration, which could represent a substantial risk to the economic trajectories of member states