Speaking with a reporter, Prof. Dr. To Trung Thanh of National Economics University (NEU) said that unpredictable developments in the global economy also present an opportunity for Vietnam to harness internal drivers such as the private sector and domestic consumption to pursue high growth in 2025 and subsequent years.

How do you assess Vietnam’s economic growth prospects in the current context?

Although Vietnam’s economy grew well in 2024 and returned to its pre-COVID growth trajectory of 2019, its growth model continued to rely on extensive growth, with little improvement in the quality of growth. New growth drivers such as innovation and the digital economy still made limited contributions to growth.

In addition, the economy remains vulnerable to global economic instability, while issues related to environmental unsustainability persist.

Given these characteristics of the economy, Vietnam needs to be very cautious about macroeconomic instability if it is to grow rapidly in the coming period. To achieve sustainable long-term growth and the goal of becoming a high-income country in 2045, economic institutional reform is essential—it could be described as the driver behind new growth drivers.

As you mentioned, institutional reform is an important driver of economic growth. Could you elaborate on this driver?

Although Vietnam’s economic institutions have been improved in line with the development of a socialist-oriented market economy and have created a very favorable environment for production and business, certain limitations remain. In particular, there is still hesitation about respecting market principles, and traditional intervention measures remain in use. In my view, there is significant scope for institutional reform in both the economy and the state administrative apparatus. Such reform will underpin economic growth in the next phase.

I recommend developing an economic legal and institutional framework that continues to ensure the state’s management role but, more importantly, supports private sector development, abandoning the mindset of “ban what we cannot manage.”

Second, policy implementation capacity needs to be strengthened.

Third, administrative controls should be minimized to create a transparent and equitable environment for all economic sectors to develop.

One issue attracting considerable attention at present is the United States’ imposition of tariffs on Vietnamese goods, with negotiations still underway. From an economist’s perspective, what would you recommend if we cannot secure a rate favorable to the economy?

The United States’ imposition of a 46% reciprocal tariff on Vietnamese goods (currently suspended for 90 days) could be a major shock if we do not achieve a favorable outcome in negotiations, because it affects both exports and the foreign direct investment (FDI) sector. These have been important sources of economic growth in recent years. Economic growth could therefore clearly be affected significantly, with implications not only for employment and income but also potentially for macroeconomic instability, exchange rates, inflation, and domestic interest rates. Managing policy to ensure solid growth in the coming period will also become more challenging.

Therefore, amid global instability and volatility, this is an opportunity for us to focus on the domestic economy. The private sector must be regarded as the most important economic sector for strengthening internal capacity and creating the flexibility needed to respond to global macroeconomic instability.

At the same time, we need to diversify export markets. Vietnam currently has many free trade agreements (FTAs), and this is an opportunity to make use of them. Concentrating on a single market clearly leaves the economy vulnerable when instability occurs.

In addition, Vietnam needs to restructure its production chains and increase domestic production. Efforts should also focus on stimulating domestic consumption and turning it into an important driver of economic growth.

Current policies indicate that there is still room to improve domestic consumption through increased public spending or selective tax cuts. This is very important for increasing private consumption, strengthening the economy’s internal drivers, and supporting growth in the coming period.

Thank you!

Source: Banking Times

This is an automated translation. If you notice any errors, please contact the Department of Communications, National Economics University at phongtruyenthong@neu.edu.vn.