[HO CHI MINH CITY] Vietnam’s parliament on Wednesday (Feb 19) has voted to revise the official growth target of the country’s 2025 gross domestic product to at least 8 per cent, from the 6.5 to 7 per cent approved last November.
The decision came as the country sought to strengthen its economy this year to create momentum for sustained double-digit growth during the 2026-2030 period and ultimately become a high-income nation status by 2045.
Last year, Vietnam’s GDP expanded by 7.09 per cent, one of the fastest rates in Asia. The growth figure also beat forecasts of most major international think tanks, including that of the Asian Development Bank and International Monetary Fund.
The push for higher growth this year also comes with the trade-off of increased inflation, with the legislature widening the expected rise in consumer prices this year to as high as 5 per cent, from the previous cap of 4.5 per cent.
Vietnam’s Prime Minister Pham Minh Chinh acknowledged that the economic expansion of 8 per cent is a “major challenge”, given that the Organisation for Economic Co-operation and Development projected global growth this year to be at just 3.3 per cent.
“If the growth rate is kept at a moderate level of 6-7 per cent, it will be very difficult for us to achieve the two centenary goals (of higher income levels by 2030 and 2045),” he added.
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Last December, Chinh even urged the ministries and localities to seek steps to enable the country to attain a two-digit growth rate right in 2025.
Economists and pundits whom The Business Times has talked to underlined that Vietnam needs to approach 8 per cent for a decade and even achieve close to double-digit growth rate to reach a position of permanently high income and join the ranks of East Asia’s elite tiger economies.
Challenges and drivers
Analysts expected the trade-reliant country to witness a challenging export prospect in 2025 due to the resurgence of deglobalisation led by US President Donald Trump’s tariff tantrums, which could trigger a knock-on impact on Asian manufacturing supply chains.
“The more ambitious GDP target, despite the risk of trade headwinds, suggests that the government will step up efforts to boost domestic demand, whether through consumption, accelerating public investment, or streamlining regulations,” Maybank analysts wrote on a note on Feb 8.
Over the past week from Feb 12 to 19, Vietnamese lawmakers have convened for the 9th extraordinary session of the National Assembly to formally decide on a sweeping reform of the state apparatus and important policies to accelerate investment.
According to a plan presented by Minister of Planning and Investment Nguyen Chi Dung in parliament last week, the government targets softer growth rates of imports and exports this year at 12 per cent, down from last year’s 16.7 per cent and 14.3 per cent, respectively.
The country will then take steps to increase total social investment to at least US$174 billion to drive economic growth. This represents 33.5 per cent of GDP and US$3 billion higher than prior planning.
Within this adjustment, the state will allocate 875 trillion dong (S$46 billion) for public investment in 2025, up 28 per cent from the amount planned for 2024.
If necessary, the country can adjust the fiscal deficit to 4 to 4.5 per cent of GDP, up from the previous 3.8 per cent target, as well as allow for public and foreign debt to surpass the threshold of 5 per cent of GDP.
On the private investment front, analysts believe it will receive a boost from supportive financial measures of the central bank, as well as the gradual recovery from the real estate downturn.
Last December, the State Bank of Vietnam set a higher credit growth target for 2025 at 16 per cent, up from 15 per cent which the banking system barely met last year.
“On the downside, even the threat of tariffs against Vietnamese goods under President Donald Trump could decrease private investment appetite,” noted analysts at research firm BMI.
Despite such challenges, the government aims to robustly disburse foreign direct investment (FDI) this year to reach a new record of US$28 billion, from an all-time high of US$25.35 billion in 2024.
Meanwhile, domestic retail sales are also projected to rise 12 per cent, versus 9 per cent seen last year.
Such a goal is backed by improving consumer sentiment amid the real estate market recovery and the government’s increased infrastructure spending, experts say.
Policies to spur growth
During the one-week-long sitting, the parliament formally approved various policies to support its higher growth target.
They include a plan for the biggest administrative reform in decades to streamline the state apparatus, with about 100,000 people affected.
The restructuring scheme, which Vietnam’s Communist Party chief To Lam described as a “revolution” in organisational reform, is designed to increase governance efficiency and relieve strain on the state budget.
The plan involves the elimination of four ministries and one ministerial-level agency, which are merged with others, such as finance with planning and investment, and information and communication with science and technology.
Other adjustments include structural changes in the organisations of the National Assembly and the Communist Party, along with the shutdown of various state-run news outlets.
On Wednesday, the legislature also signed off on a resolution concerning the pilot implementation of policies to resolve obstacles in science, technology, and innovation until the end of 2030.
This includes a provision that allows for full foreign control of satellite Internet providers. Among some dominant players in the sector, Elon Musk’s SpaceX has been making efforts to enter the Vietnam market with its Starlink system.
Special mechanisms to accelerate the development of metro networks in Ha Noi and Ho Chi Minh City and the nuclear power plants in Ninh Thuan province also got the go-ahead.
According to the latest plans, Vietnam wants to put in place additional 752 kilometres of 17 urban rail lines by 2035 in its two largest cities, and the first nuclear power plant as early as 2031.
The parliament also approved the investment policy for a US$8.4 billion high-speed railway project linking Vietnam with China and running through some of Vietnam’s key manufacturing hubs in the north.
The railway, which it wants to be finished by 2030, will be financed by the state budget, foreign loans provided by the Chinese government, and other legitimate sources.
