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Vietnam’s economic growth forecast to rebound strongly in 2022
Vietnam’s economic growth forecast to rebound strongly in 2022
Some foreign financial organisations have issued relatively
positive predictions for Vietnam’s economy this year, with growth expected at
6.5 - 6.7 percent.
Standards Chartered held that the GDP growth will
rebound strongly to 6.7 percent in 2022 and 7 percent in 2023, saying Vietnam’s
medium-term outlook remains positive.
The bank made the forecast in its latest reports titled “Still battling
headwinds” and “Vietnam - Moving back to high growth“.
“The economy should continue to bounce back in 2022 as the pandemic improves.
Income growth has outpaced spending growth in recent years; this provides a
decent savings buffer against the pandemic.” said Tim Leelahaphan, economist
for Thailand and Vietnam at Standard Chartered.
“COVID-19 remains a key risk, at least in the short term. The first quarter
could see a full resumption of factory operations, after closures in Q3/2021,
and government stimulus; clearer recovery is expected in March,” he noted.
Economists at Standard Chartered said a continued improvement in the global
trade environment will support exports in 2022 although import growth is likely
to remain high.
In the recent “Vietnam at a glance” report, HSBC said after two years of growth
slowdown, the country’s economic
growth will accelerate to reach 6.5 percent in 2022. The
Government also targeted this year’s GDP expansion at 6.5 - 7 percent,
equivalent to the pre-pandemic levels.
It noted Vietnam has
recovered steadily after hitting bottom in 2021 and that it will regain growth
momentum in all aspects soon.
Manufacturing and export are expected to retain their leading positions, partly
thanks to the stable commitments to foreign investment attraction. Besides,
domestic demand is likely to bounce back further when current restrictions are
gradually removed and the labour market revives.
HSBC noted the biggest obstacle needing attention now is the ongoing COVID-19
outbreak, especially the appearance of the Omicron variant, but it is
encouraging that the vaccination has been much improved, enough for avoding
another period of widespread social distancing./.
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All comments [ 18 ]
Vietnam’s economic growth forecast this year is revised down to 3.8% from the previous estimated 6.7% in April due to the prolonged Covid-19 outbreak but would rebound strongly to 6.5% in 2022.
The Vietnamese economy will bounce back if the Covid-19 pandemic is brought under control by the end of 2021 and 70% of the country’s population are vaccinated by the second quarter of 2022.
Growth could be aided by a revival of domestic demand, an acceleration in the disbursement of public investment funds, and an expansion to new export markets thanks to multiple free trade agreements and the expected global economic recovery.
Vietnam can benefit from removing administrative hurdles to business and people, and accelerating digital transformation, which will help improve the efficiency of pandemic containment measures and support a sustainable economic recovery this year and next.
Foreign investors come to Vietnam as they look at the fast-economic expansion rate and growing middle class.
Investors would be more settled if they are informed of the Government’s plan on the timing for economic reopening or at least an estimated time frame, as everyone knows lockdown is only temporary solutions.
The rebound will also be supported by the vaccination of at least 70 percent of the adult population by mid-2022, preventing severe new outbreaks.
2021 was another challenging year for Vietnam as the Delta variant forcing many economic activities to shut down in the third quarter.
The growth target is feasible and actual rate could even exceed it thanks to the recovery of major export markets such as the U.S. and Europe, and the many free trade agreements Vietnam has signed, including 14 that have taken effect.
Without special support programs, without fiscal and monetary stimulus packages, Vietnam will miss opportunities, be left behind, and not realize its five-year economic development targets.
So as 2021 draws to a close, it is time to take a deep breath, believe that the worst is really behind us this time and that Vietnam will resume its economic cadence from 2019.
Continued middle class growth and the rising affluent sector in particular will further drive the consumer story in Vietnam, which will lead changes in consumption as Vietnamese start spending more and more on leisure and travel.
The timely shifting by the government to a new strategy to safely adapt and respond to the pandemic has allowed businesses to resume economic activity.
The impressive vaccination rates would support the bounce-back of manufacturing and services. Vietnam’s market access from multiple free trade agreements will continue to aid trade and investment.
This means continued vaccinations and booster shots remain critically important. While fiscal policy would take the centre stage, it must work in harmony with monetary policy to support recovery.
The country can afford a higher budget deficit and increased public debt in the next two years to support the economy.
Policymakers need to set appropriate targets for each period to develop a support package on a large enough scale as Vietnam’s current fiscal stimulus package is less than 2 per cent of GDP.
Businesses need to look at other locations depending on the type of industry and raw materials to ensure contingency plans remain in place.
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