According to a new report from the World Bank (WB), Vietnam’s economy is set to grow to 7.5% this year. The Vietnamese economy has recovered over the past six months thanks to resilient and strong manufacturing and services. The report stated: “Vietnamese economy grew by 5.2% and 5.1% in Q4 2021 and Q1 2022, respectively, as a result of high consumer spending and a large increase in international tourist numbers.”
In 2022, the Vietnamese government aims for a growth rate of 7%, but the recently published report is a positive sign for Vietnam. The forecast is based on the assessment and recovery of the Vietnamese economy over the past six months. It is surprising to see the growth of the Vietnamese economy pick up sharply from 2.6% in 2021 to 7.5% in 2022. Ms. Carolyn Turk, WB director of Vietnam, predicts that Vietnam’s GDP growth will remain positive in the second half of 2022 and 2023. However, Vietnam faces domestic and international challenges that would slow the economic recovery.
Vietnam would face risks of inflation and slowing growth from its main export partners, such as the US and China. In addition, global commodity prices and supply chains have been disrupted by the war in Ukraine, or new forms of COVID-19 are emerging.
Ms Carolyn Turk also further stated: “If major economies and key export markets such as the United States, the EU zone and China decline more sharply than expected, Vietnam’s exports could be lastingly affected.” Vietnam also faces domestic challenges such as labor shortages, inflation and risks in the financial sector.
In his recent business forum conversation, Forbes Vietnam magazine invited an expert to discuss inflation and other issues affecting Vietnam’s economy. Nguyen Xuan Thanh, a lecturer at the Fulbright Business Public Policy School, suggested that Vietnam will contain the 4% inflation target set by the Vietnamese National Assembly in early 2022 and that inflation will be contained this year.
He analyzed the inflation rates of other countries around the world that would affect Vietnam. Specifically, the red band has an inflation rate of 8.6-9.6% including the US and Europe; brown belt of 7-7.7% including Thailand, Cambodia, India; yellow band 5.6 -6.1% including Korea, Singapore and the Philippines and blue from 2.4-4.4%.
The Vietnamese economy will receive positive signals, but Vietnam should be careful about international and domestic factors that would influence the growth of the economy in 2022.