The report said Vietnam’s economic outlook is positive but heightened domestic and external headwinds require coordinated and data-driven policy responses from authorities.

Dorsati Madani, the World Bank’s Senior Country Economist, who wrote the report, said that the external demand especially in the first half of the year will be a little bit weaker, mostly because of what’s going on in the US and the EU.

As authorities try to slow down growth and bring inflation under control, their economies are expected to slow, and therefore, bring the purchase from Vietnam, for example, less, she said.

“The recovery in the second half of the year, we think, this will be more promising, the external demand, we think the US and the EU will recover better, and therefore, the demand for exports from Vietnam will be probably firmer. We do expect the inflation to be on average for the year at 4.5%."

"We also think that overall investment will continue to provide a solid input into the contribution to the GDP growth, mostly because FDI, we expect, will continue to flow solidly. Also, as the economy improves in the second half of the year, we think, there will be more domestic investment, private investment,” she added.

Ms. Madani said Vietnam’s GDP growth is likely to see progress in the next two years and is expected to reach 6.5% in 2024 onward. CPI is expected to moderate to 3.5 % in 2024 and 3.0 % in 2025.

Carolyn Turk, World Bank Country Director for Vietnam, said Vietnam has the fiscal space to implement measures to boost growth. Effective implementation of priority public investments is key to support growth, both in the short-term and in the longer-term. Also, fiscal and monetary policies must be synchronized to ensure that support to the economy and macroeconomic stability are achieved effectively.