Vietnam economic growth to hit 5.5% in 2022

13 Jan 2022

The economic recovery in Vietnam will likely accelerate this year as GDP is forecast to increase to 5.5% from 2021’s figure of 2.6%.

This is according to the World Bank’s latest economic update for the country.

Vietnam’s services sector will recover gradually on stronger consumer and investor confidence, assuming the pandemic will be under control at home and overseas, according to the bank’s findings. The manufacturing sector will also take advantage of solid demand from the U.S., China and European Union.

In addition, the country’s fiscal deficit and debt are forecast to stay sustainable, with the ratio of debt-to-GDP predicted to hit 58.8%, far below the statutory limit.

However, new coronavirus variant outbreaks may lead to further restrictions, which could hamper economic activity. Indeed, weaker-than-forecast domestic demand within Vietnam could impact the recovery.

To ease these headwinds, a series of fiscal policy measures, such as a short-term reduction of VAT rates and increased health and education spending, could bolster aggregate domestic demand.

The World Bank’s report, entitled “NO TIME TO WASTE: The Challenges and Opportunities of Cleaner Trade for Vietnam,” also says a green trade sector must take priority, as it accounts for a third of Vietnam’s total greenhouse gas emissions.

Although the country has already initiated the decarbonisation of trade activity, there’s a long way to go to react to increasing pressure from multinational firms, consumers and main destination markets for greener products and services.

According to Carolyn Turk, World Bank Country Director for Vietnam: “Trade will be key component of Vietnam’s climate actions in the years to come. Promoting greener trade will not only help Vietnam follow through on its pledge to reach net zero emission in 2050 but will also help it keep its competitive edge in international markets and ensure trade remains a critical income and job generator.”