VIETNAM MACRO SNAPSHOT
MARCH 2024

In the first 2 months, the macro data show promising signs of domestic economic recovery.

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• The industrial production index increased by an average of +5.7%yoy. This is a considerable increase over the past two years, and improvements have occurred in almost sectors, except for mining, electronics, and beverages, which still negative growth.

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• Export turnover and trade surplus both reached record levels compared to the same period in previous years. The growth has occurred broadly in most major markets and product groups (except for seafood, which have not seen significant changes). Specifically, the total export value of the country reached $59.34 billion, an increase of +19.2%yoy; And the trade surplus reached $4.72 billion in the first two months of 2024.

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• Registered and disbursed FDI capital was quite high from the beginning of the year. Registered capital reach $4.04 billion, an increase of +75.6%yoy; Disbursed capital reached $2.8 billion, an increase of +9.8%yoy.

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Vietnam is perceived to be facing many opportunities to attract FDI inflows, in the context of multinational corporations tending to shift production out of China, and the global race to invest in the chip and semiconductor sectors.

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• The total scale of national consumer goods and services reached 1,031 thousand billion VND, an increase of +8.1%yoy. The business operations in the tourism sector during this Lunar New Year period were also very positive in terms of both the number of guests and revenue. Accommodation establishments recorded a high increase in guest volume and room capacity.

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• The number of newly established businesses increased by +12.4%yoy, and the number of businesses returning to operation increased by +4.4%yoy. Despite remaining difficulties, there is confidence in improving business trends. The rate of searching/renting business premises shows signs of increasing again after Lunar New Year.

• The stock market has many improvements in indexes.

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However, it is still important to note one point that could hinder recovery.

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• The consumer demand of the people is still weak. Evidence is that the demand for shopping for Tet goods and gifts this year is weaker than usual, even though the price level of goods has not increased much.

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• The potential for growth in global demand in general and Vietnam’s exports in particular needs to be further verified in the coming months. (i) According to the economic data for February 2024 from China, Japan, and Taiwan, which were just announced, it is quite gloomy. (ii) The rush of imports in the markets over the past two months may be partly due to importers increasing their stockpiles, following concerns about the risk of maritime disruption and supply of goods due to conflicts in the Red Sea region.

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• What are the ‘effective’ policies and solutions for Vietnam to maintain its competitive advantage in attracting foreign investment, (i) in the context that the global minimum tax will take effect from January 1, 2024; and (ii) some foreign investors believe that their business results in Vietnam in 2023 are ‘less sharp’ than other markets in the ASEAN region, partly due to rising worker costs, and the competition in the domestic market is becoming increasingly fierce.

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• The increasing level of Chinese imports is threatening the business/consumption situation of domestic brands/companies, in the context of weak domestic demand. The value of imports from China in the first two months of 2024 increased nearly 50%yoy.

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• The absorption of credit capital in the first two months of the year is still weak. The pressure of the USD/VND exchange rate may still persist in the first half of the year, in the context that the FED signals ‘no hurry’ to cut interest rates (although the general pressure in 2024 is expected to be ‘softer’ than in 2022-2023).

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