Country Director of the ADB for Viet Nam Shantanu Chakraborty - Photo: Quang Thuong

In a recent interview with VGP, Shantanu Chakraborty said, Viet Nam achieved an impressive 5.66 percent GDP growth in the first quarter of this year, adding that it is quite commendable given the headwinds in the international scenario.

It is a testament to the resilience of the Vietnamese economy and the nation belongs to the group of countries with high economic growth rates, he noted.

Regarding challenges to Viet Nam's economy in 2024, he said, the main challenges are the lack of stability in the global arena, in terms of the conflicts in Ukraine and the Middle East. These challenges may cause disruptions in supply chains, and subdue demand for Vietnamese goods, especially for an export-oriented economy like Viet Nam.

In addition, when the interest rates in the international market go down, it could put some pressure on the Vietnamese Dong in the near future.

Meanwhile, Viet Nam should take measures to boost consumption and put more money in the hands of people through fiscal policy.

Besides, the ADB suggested Viet Nam ensure public investment on the right track. The Vietnamese government has set a target of disbursing 95 percent of US$27 billion of public investment by the end of this year. It is very ambitious but it is very necessary, he noted.

Viet Nam needs climate-resilient and sustainable infrastructure in areas such as power, road and logistics to continue to attract foreign direct investment (FDI), said the ADB Country Director, adding that the nation should improve its regulatory environment and carry out policy-oriented reforms to speed up disbursement of public investment capital.

Main growth drivers of Viet Nam's economy

Viet Nam's main growth drivers in the next coming months of this year include services, manufacturing, FDI and domestic consumption.

Viet Nam's service sector has shown signs of improvements. The tourism sector continues impressive recovery. The nation welcomed over 4.6 million international visitors in the first quarter of this year, up 72 percent year-on-year and up 3.2 percent compared to the same period from 2019 before the outbreak of the COVID-19 pandemic.

Export-led manufacturing will remain the pillar of Viet Nam's economy despite all the challenges as Viet Nam has entered into a lot of free trade agreements (FTAs) with key trading partners.

Shantanu Chakraborty underlined the importance of FDI for Viet Nam's economy, adding that Viet Nam lured close to US$6.17 billion in FDI over the first three months of this year, up 13.4 percent year-on-year. Last year, disbursement of FDI made a record high.

Besides attracting more FDI on the manufacturing sector, it is necessary to see more quality FDI coming into infrastructure, renewable energy such as offshore wind, economic zones, logistics and roads connectivity, he recommended.

In term of domestic consumption, Viet Nam should undertake a very prudent fiscal policy so that domestic consumption can be boosted, through the ripple effect of public investment or through other incentives such as prolonging the reduction in the value-added tax VAT rate.

Asked about Prime Minister Pham Minh Chinh's statement at the Viet Nam Business Forum 2024 that Viet Nam firmly rejects the "grow first, clean up later" approach, Shantanu Chakraborty said, the ADB is fully supportive of the PM's statement.

It shows that Viet Nam actively and responsibly participates in promoting green growth and sustainable development, he stated./.