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Vietnam’s economy back on track for strong recovery
Vietnam’s economy back on track for strong recovery
In an article posted on July 12, The Business Times of
Singapore cited some economists' opinions that said Vietnam’s economy is back on track for
a strong recovery this year.
John Paul Lech, portfolio manager at Matthews Asia, said Vietnam is a frontier
market star. While frontier markets are generally smaller, less liquid and have
limited foreign investor access, it has bucked the trend.
For the first six months of 2022, foreign direct investment (FDI)
into Vietnam grew by nearly 9% to 10.1 billion USD.
Economist Chua Han Teng from DBS, the largest bank in Singapore, forecast
Vietnam’s GDP expansion will reach 7% this year to meet the set target.
He held that the service sector will continue growing fast when COVID-19 is
classified as an endemic disease. The service sector, especially retails, is
bouncing back strongly while the number of new businesses is increasing.
He added Vietnam is emerging as an exporter of information and communications
technology, and its market share may develop further.
The United Overseas Bank (UOB)
recently upgraded the country’s GDP growth forecast for 2022 to 7% from 6.5%
basing on a simulation that there won’t be any more serious disruptions caused
by the pandemic.
The optimism was supported by a higher-than-expected GDP growth rate in the
second quarter, at 7.7% compared to the same period last year - the fastest
pace in 11 years and much higher than the previous estimate of 5.9%. This
strong recovery was driven by manufacturing activities which have accelerated
for four straight quarters and the rebounded service outputs which have
continued regaining its foothold since the last decline in the third quarter of
2021.
However, economist Yun Liu said despite an optimistic growth trend, the energy
crisis has begun affecting Vietnam’s growth, recommending the country pay
attention to rising growth risks, especially those posed by soaring energy
prices./.
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All comments [ 19 ]
Vietnam’s Gross Domestic Product (GDP) in the second quarter of this year was estimated to increase 7.72% year-on-year, higher than the growth rates in the same quarters during the 2011-2021 period.
The country's socio-economic development in the first six months of 2022 has prospered in most industries and fields, especially processing and manufacturing industry; retail sales of consumer goods and services; and exports.
HSBC has raised its forecast for Vietnam’s economic growth this year to 6.9%, from the previous prediction of 6.6%, which is possibly the fastest pace in the region.
Decreasing risks posed by the Omicron variant and eased restrictions have paved the way for Vietnam to return to the normality.
Thanks to widespread recovery, the country recorded an impressive GDP growth rate of 7.7% in the second quarter compared to the same period last year.
The service sector, which has suffered from severe economic impacts, have bounced back strongly while manufacturing has continued growing and exports hit historic highs.
Vietnam has benefited from economy reopening, and domestic demand has returned while external drivers remain favourable. However, it is necessary to stay alert to increasing growth risks, especially the ones posed by surging energy prices.
Thanks to achievements in the socio-economic recovery and development process, Vietnam was one of the two Asian-Pacific economies to have its long-term sovereign credit rating raised to “BB+” with a “stable outlook” by S&P.
All sectors need to rest on its laurels but keep a close watch on the situation and make timely response to fast changes in order to surpass development targets for 2022.
The industry and construction sector was up 8.87%, making up 46.85%, while the service sector rose by 8.56 percent, contributing 48.59 percent to the general GDP growth.
The bank also expected Asia’s emerging currencies such as the VND to be weighed as the Fed looks set to front load its rate hikes further in H2.
Vietnam is still seen as an attractive destination and the problems of 2021 do not mean that foreign investors will turn away.
The investment environment of Vietnam in the long term is prominent compared to other ASEAN major economies thanks to the political stability.
The state-owned enterprise sector is an important force in the country’s economy; contribute significantly to socio-economic development, national defence and social security while performing political tasks assigned by the Party and the Government.
The state-owned enterprise sector maintains a core and leading role in the socialist-oriented market economy, contributing to building an independent and self-reliant economy.
They play a pivotal role in several industries and fields and generate a significant source of revenue for the state budget.
The country's industrial production and total retail sales of consumer goods and services rebounded as economic activities gradually resumed.
Despite rising fuel prices, inflation remained subdued due to falling food prices and weak domestic demand for other consumer products.
It shows foreign investors’ confidence in Vietnam’s economic scenario in mid-and long terms.
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