Vietnam’s GDP growth is expected to be 6.5-7.5 percent in 2022, according to analysts, citing strong recovery potential in manufacturing and domestic consumption.

Vietnam’s growth is expected to be 6.5-7 percent from 2022 onwards, according to the World Bank, as a prolonged global recovery would assure solid demand for Vietnamese products in its primary export markets of the United States, the European Union, and China.

“By mid-2022, at least 70% of the adult population will have been vaccinated, averting serious new epidemics,” it claimed in a study.

Vietnam met its immunization goal by the end of 2021 and is now focusing on administering the booster injection to combat the new Omicron form.

The World Bank also announced this week that it will provide a $221.5 million loan to help Vietnam recover from the pandemic, with a focus on key policy measures including as lowering corporate tax burdens and boosting financial assistance to disadvantaged people.

The Asian Development Bank (ADB) forecasts 6.5 percent growth for Vietnam in 2022, owing to increased vaccination coverage and other reasons, while stockbroker VNDirect predicts 7.5 percent growth.

Growth-driven manufacturing and exports are recovering traction, according to the brokerage, as are robust foreign direct investment and higher domestic demand caused by stimulus programs.

In 2022 and 2023, VNDirect forecasts firms to recover well and sustain an average profits per share increase of 20%.

One of the primary drivers of development is that the government is on track to reach its goal of fully vaccinating 70% of the population this year, according to the report.

If the Covid-19 issue continues under control, services are anticipated to rebound in the second quarter with the restoration of tourist and entertainment.

As a result, revenue from retail and services might increase by 10% to 12% in 2022.

Several businesses are putting together recovery plans.

Thanh Cong Textile Garment Company expects to boost its workforce by 20% as a result of numerous large orders that will keep workers employed for the first half of the year.

“We want to grow into additional European and African nations this year, in addition to the primary export markets of Asia and America,” said Tran Nhu Tung, deputy general director.

The tourist sector is expected to return this year, according to Phan Phuc Son, deputy director of the Saigon – Ha Long Hotel Tourism Jsc in Quang Ninh’s northern region.

“In January 2022, the first international tourist group is projected to arrive in Quang Ninh Province, allowing us to continue our recovery.”

The hotel is collaborating with governmental authorities and companies in the Quang Ninh Tourism Association to create a “green corridor” for package tours that will cater to the demands of foreign visitors visiting Vietnam.

Attainable goals

The Delta variation forced many economic activities to shut down in the third quarter of 2021, making it another difficult year for Vietnam.

For the second year in a row, GDP growth has slowed to 2.58 percent.

The National Assembly, on the other hand, anticipates growth to go up in 2022, with a target of 6-6.5 percent for the year.

The growth target is achievable, according to Tran Hoang Ngan, director of the Ho Chi Minh City Institute for Development Studies, and the actual rate could even exceed it, thanks to the recovery of major export markets such as the United States and Europe, as well as the many free trade agreements Vietnam has signed, including 14 that have taken effect.

The government must focus on disbursing VND526 trillion ($23.25 billion) in public investment to ensure growth, which he described as “both an opportunity and a problem.”

According to some analysts, the magnitude of the stimulus package will influence how quickly and effectively the economy recovers.

“Without special assistance programs, fiscal and monetary stimulus packages, Vietnam would miss out on chances, fall behind, and fail to meet its five-year goals.”

According to Bui Quang Tuan, director of the Vietnam Institute of Economics, the whole economic recovery program, which would be executed between 2022 and 2023, might cost VND666 trillion, or 8% of 2020 GDP.

Growth-supporting measures should be linked to digital transformation and green growth, he added, and the aid package should be substantial and robust enough to support both supply and demand.

The size of the stimulus package will be decided in January during an eight-day special session of the National Assembly.

The World Bank has encouraged the government to strengthen the execution of its financial relief programs in order to reach more impacted households, informal workers, and individuals who are not listed in current social assistance registries.

It has been suggested that cash assistance be provided over a period rather than as a one-time payment.

Obstacles still exist.

However, some MPs are concerned that as the government implements stimulus programs, the public debt ratio would climb, causing financial problems.

According to Nguyen Huu Toan, deputy head of the National Assembly’s Finance and Budget Committee, the predicted public debt ratio of 44 percent of GDP this year appears modest, but it was achieved after some data was adjusted, causing GDP to rise by VND1,000 trillion.

“While the ratio appears to be modest, it is actually a cause for concern.”

Inflation, which is expected to be quite high in 2022, is another source of concern, according to Nguyen Thi Huong, the head of the General Statistics Office.

Demand for production and consumption will grow as Covid-19 is likely to remain under control, she added, as will costs for commodities, energy, and transportation.

Inflation will also be pushed up by growing prices of livestock feed, construction, and education, according to her.

Despite the fact that Vietnam’s inflation fell to a six-year low of 1.84 percent in 2021, the ADB predicts it will rise to 3.8 percent next year due to global price volatility and pressure from a weaker dong against the US dollar if capital outflows occur as a result of advanced economies’ more front-loaded response to inflation.

Despite these obstacles, Tim Evans, CEO of HSBC Vietnam, is optimistic that the nation would achieve new heights in 2022.

“As the year 2021 draws to a conclusion, it’s time to take a deep breath and believe that the worst is truly behind us this time, and that Vietnam’s economic cadence will restart in 2019,” he stated.

According to HSBC, growth would reach 6.8%, owing to a return to robust FDI investment with a clear focus on the manufacturing sector, which should help the Vietnamese export sector develop even faster.

Continued middle-class expansion, particularly among the wealthy, will fuel the consumer narrative in Vietnam, resulting in shifts in consumption as Vietnamese begin to spend more on leisure and tourism, he noted.

Source: https://e.vnexpress.net/news/business/economy/vietnam-set-for-robust-rebound-in-2022-4410723.html