ADB is optimistic about Vietnam’s economy13/04/2022
ADB forecasts that Vietnam’s growth this year will reach 6.5%, higher than the forecasts of other organizations such as WB, HSBC.
The Asian Development Bank (ADB) has just published an Asian economic outlook report, which confirms that Vietnam’s economy is ready to recover strongly in the context of a volatile world economy.
According to ADB, Vietnam’s economy is expected to recover at 6.5% in 2022 and grow more strongly at 6.7% in 2023. The basis for this forecast is high immunization rates, increased trade and continued expansion of fiscal and monetary policies.
ADB’s assessment is much more optimistic than that of other organizations such as the WB – which reported GDP growth of 5.3% this year after many downward revisions; or HSBC has lowered its forecast from 6.5% to 6.2% in the face of the risk of global fuel shortages.
According to Nguyen Minh Cuong, ADB chief economist, there are 3 main factors that help Vietnam’s economy recover.
The first is the motivation from the manufacturing industry. Cuong said that in the first 3 months of the year, the recovery of the business was relatively good with about 35,000 enterprises registering to establish new. The workforce as well as the return of enterprises are supporting the processing industry. However, he also said that this improvement still takes more time to form a stronger thrust.
The second is trade and investment. According to ADB experts, trade is growing well, disbursing foreign investment capital at a very high level. Trade and investment are very closely associated with the opening process of the Vietnamese economy through the FTAs that have been signed. With the impact of Covid-19 and reduced global investment flows, FDI into Vietnam is still expected to grow strongly.
The third is service. Cuong said that, in addition to the services that still maintain the momentum, the tourism industry is undergoing a positive change thanks to flexible Covid-19 control policies and Vietnam’s reopening. It is expected that the sector will have good growth momentum in 2022 and 2023.
However, Vietnam will also face some key risks, according to ADB representative. Accordingly, the Covid-19 pandemic, if not reduced, could prevent the economy from returning to a normal state this year. The global economy tends to slow down with geopolitical uncertainty and Russian-Ucraine tensions. Or internally, Vietnam’s financial and monetary markets are also revealing some problems in 2021 and 2022 such as bad debts or corporate bonds…
In addition, ADB assessed that Vietnam’s first-quarter inflation showed signs of rising, but inflation in 2022 remained at the control level of 3.8%. By 2023, the organization forecasts inflation of over 4% and said, this is the general trend of Southeast Asian countries when inflation is under control, monetary policy is still in relaxed level.