The ADB holds a press conference to release the bank's annual economic publication Asian Development Outlook. (Photo: VOV)

“The Government of Vietnam has initiated an ambitious plan to boost growth, which can help mitigate the significant external risks,” said ADB Country Director for Vietnam Shantanu Chakraborty in the report. Higher and sustainable economic growth is possible if ongoing, extensive institutional reforms are implemented swiftly and efficiently, he added.

According to Chakraborty, such reforms would stimulate domestic demand, increase governance efficiency in the near term, and consequently promote private sector development over the medium and long term. But recent US announcements on tariffs, along with other continued global uncertainties, could pose significant challenges to Vietnam’s growth this year, according to the ADB expert.

Therefore, Vietnam needs to also make use of other opportunities to develop, he suggested. "Vietnam's extensive efforts in expanding the relationship with their key trading partners, especially on the economic front has come up with a very robust set of FTAs with various trading partners. That's why I said Vietnam comes into this challenge from a strong position."

"So it's definitely the time to leverage on those free trade agreements that are in place and see how Vietnam can diversify its export base. Basically, tariff escalation is actually a positive trend, and clearly this combines with the fact that the FTAs are in place and there's mutual agreements on strengthening trade between these trading partners, you know, the UK, EU, Korea. So it's really time to ramp up those FTAs to reduce reliance on the US and to enhance the export and diversify the export definition base, and also to strengthen regional cooperation and integration."

As global economic dynamics evolve, Vietnam’s advantages in added value to global supply chains are also shifting. It is important to understand the limitations and challenges associated with broadening its participation in and increasing its added values to global supply chains, to improve the country's economic trajectory and long-term growth potential, said ADB report.