World Bank forecasts Vietnam 2024 GDP growth at 6.1%, warns on bad loans

THE World Bank on Monday (Aug 26) forecast Vietnam’s gross domestic product (GDP) growth for this year at 6.1 per cent, but warned that banks’ asset quality remained a concern.

The country, a regional industrial hub, is targeting 6.5 per cent GDP growth this year on expected external recovery and increased public investment, accelerating from last year’s expansion of 5.05 per cent.

“With continued export growth and signs of a real estate recovery, domestic demand is set to firm up in the second half of 2024 as investor and consumer sentiment improves,” the World Bank noted.

However, asset quality has become a significant banking sector concern amid increasing non-performing loans (NPLs) and loan-loss coverage, the international financial institution added, as NPLs have grown significantly from 1.9 per cent in 2022 to 4.6 per cent of total loans in 2023.

It said that total problem loans could be as high as 7.9 per cent if restructured loans and Vietnam Asset Management Company debts are included.

The World Bank also forecast Vietnam’s headline inflation rate at 4.5 per cent this year, compared with inflation of 3.2 per cent last year, as higher food prices are expected to persist.