At the online press conference to launch the World Bank’s (WB) April 2022 East Asia and Pacific Economic Situation Update Report on April 5, Mr. Aaditya Mattoo, chief economist, In the East Asia-Pacific region, Vietnam’s economy will expected to grow by 5.3% in 2022.
Mr Aaditya Mattoo, chief economist, East Asia and the Pacific, said Vietnam’s economy is expected to grow by 5.3% in 2022 – Screenshot
The above forecast is based on the policy to live with Covid-19, the solid performance of the export-oriented manufacturing and processing industry and the recovery of domestic demand. The poverty rate is expected to decline in 2022, but at a slower rate than before the epidemic.
More than 78% of the population has been fully vaccinated, according to the World Bank, but the economy still faces negative risks related to emerging tribes, the global impact of the Russian invasion of Ukraine. , rising world commodity prices and slowing growth in key export markets.
Vietnam’s GDP growth is expected to reach 5.3% in 2022 and then stabilize at around 6.5% in the scenario where travel restrictions are relaxed both domestically and abroad. The services sector is expected to gradually recover as consumer confidence has recovered andtourismInternational visitors are expected to gradually recover from mid-2022.
Export sales of processed and manufactured goods are expected to grow at a slower pace as growth in Vietnam’s main export markets (such as the US, European Union and China) slows. †
However, this outlook also faces increasing negative risks. Slowing growth in key trading partners combined with a shock in trade tariffs from the Russia-Ukraine conflict and related sanctions could affect the recovery. These factors could be exacerbated if a new strain of Covid-19 emerges.
The economic recovery also depends on the speed of the recovery in domestic private demand, which is still relatively sluggish, reflecting cautious consumer and investor sentiment.
The current phase of severe infections may lead to temporary disruptions in the labor supply and production. As the economy has recovered strongly since the start of the year, the impact on economic growth could be mitigated if the government deploys a strong fiscal policy support package. Monetary policy has yet to be eased, but must remain cautious to manage risks in the financial sector. According to the World Bank, the event of additional shocks could lead to a bad scenario where GDP growth will be only 4% in 2022 and recover to 6% and 6.5% in 2023 and 6.5% respectively. 2024.
Poverty is expected to decline in 2022, assuming GDP growth recovers to pre-pandemic levels, but the impact of the crisis will have a lasting effect on rising inequality. Rising inequality can have human capital and economic consequences for the country. “Sold properties will not be able to generate future income while the uneven quality and disruption of education during the Covid-19 crisis will have positive consequences. accumulation of human capital and income potential throughout life,” recommends the World Bank report.
According to the WB’s chief economist, East Asia and the Pacific, Mr Aaditya Mattoo, Vietnam is one of the WB’s economies that has slashed its economic growth forecast, from a growth forecast of 6.5% in October 2021. to 5.3% (with a bad scenario of 4%).
“The WB lowered its growth forecast due to the difficulties Vietnam is experiencing in dealing with the Omicron mutation, the high number of new infections. In addition, Vietnam’s oil imports amount to up to 3% of GDP. Vietnam is one of the countries that is very successful in participating in global value chains, seizing opportunities to expand global trade and increase openness to the global economy, but this will also leave Vietnam vulnerable. than before the shocks from outside “- Mr. Aaditya Mattoo analyzed.
According to this expert, Vietnam will have to be more successful in setting up social security systems. At the same time, it needs to be extra careful when it comes to its financial systems. Countries in the region will have to carefully study support measures in the financial sector, such as: Preferential measures, easing, interest rate cut, debt restructuring but no debt grouping… Measures The legal framework of the banking and financial system introduced by Vietnam should be carefully studied.
“Up to now, measures have been taken to move further and higher in the global value chain, but now it is necessary to make Vietnam’s participation in the global value chain more sophisticated and sophisticated,” the World Bank economist advised.
Vietnam has been very successful in attracting foreign direct investment for many years, improving its position in global value chains, helping Vietnam to achieve good growth rates and good poverty alleviation. “If I have any advice for you, it is necessary to find a way to develop the service sector in depth. The service sector is of great importance and we need to increase labor productivity in the service sector to provide the impetus for increasing productivity in both the service sector and business. This requires all services such as the transportation system, financial and accounting services, and insurance. … everything has to be better. All these phases need to be improved. Vietnam is currently lagging behind in digital transformation, which is also an aspect that needs attention to develop more” – notes the gentleman.