Vietnam is still a bright spot
In a recent article, Asia Times said that Vietnam is Asia’s best-growing economy in 2022. “Vietnamese policymakers can celebrate its excellent economic performance in 2022. ”, the article wrote and attributed this achievement in large part to the ability to attract foreign investment to shift away from China.
According to Asia Times, Vietnam’s foreign investment attraction in 2022 is impressive. At least 11 Taiwanese companies in Apple’s supply chain have moved to Vietnam and negotiated to increase production. The Danish Lego Group has also started construction of a $1 billion factory in Binh Duong. Meanwhile, existing foreign investors such as Samsung and Intel are continuing to expand their operations here.
In the macro report on the Asian economy published on December 22, HSBC said that Vietnam is likely to continue to be one of the outstanding growth countries in Asia. This bank commented, 2022 is a year of explosive recovery for Vietnam. GDP in the third quarter increased by 13.7% year-on-year thanks to a strong external sector and strong domestic demand. As a result, HSBC has raised its GDP growth forecast this year to 8.1%, up from the previous forecast of 7.6%.
International organizations are forecasting Vietnam’s economic growth prospects next year (Photo: Pham Nguyen).
Recently, the Asian Development Bank (ADB) also assessed Vietnam as a bright spot in the region when many economies fell amid negative impacts from the tightening of monetary policy globally protracted Russia-Ukraine conflict and China’s anti-Covid policy. In that context, ADB raised its forecast for Vietnam’s economic growth this year from 6.5% to 7.5%, while lowering inflation to 3.5%, down from the previous forecast.
Sharing the same opinion, the World Bank (WB) also forecasts that Vietnam’s economic growth this year will be the highest in the region, reaching 7.2% instead of 5.3% as forecasted in April.
Outside influence
Although Vietnam’s economy is performing well, in the context of the global economy with many uncertainties, ADB noted, risks to the economic outlook are increasing. Global demand for Vietnamese exports is declining.
The updated report of the World Bank (WB) also notes that both the growth drivers of Vietnam’s economy, including exports and domestic demand, are slowing down, and consumption after the pandemic is slowing down signs of slow recovery.
Also noting the signs of export deceleration, HSBC pointed out that the main reason was the weakening of the electronics sector (accounting for 35% of total turnover). In addition, the US economic downturn also makes the export situation difficult, because this is the largest market for many export products of Vietnam. However, HSBC still believes that domestic demand and the recovery of the labor market will be a positive light in this context.
Due to many challenges, it is likely to hit harder next year, especially after the effects of reopening fade and the impact of high inflation begins to become apparent. HSBC forecasts inflation next year may reach 4%. This means that the monetary tightening cycle will continue to be maintained.
Although 2023 will be a year of many difficulties and challenges, international financial institutions and organizations still assess that Vietnam’s economy maintains a positive momentum and that Vietnam is ready for rapid growth next year.
ADB forecasts Vietnam’s economic growth next year at 6.3%, adjusted from 6.7% in the previous forecast, due to weakening of major trading partners.
Meanwhile, HSBC remains optimistic about Vietnam’s economic growth and forecasts that next year Vietnam will maintain the highest growth rate in the region. Vietnam’s GDP growth in 2023 is forecast at 5.8%, compared with 2.1% in Singapore, 3.8% in Thailand, 4% in Malaysia, 4.3% in Indonesia and 4.3% in Indonesia. 4% of the Philippines.
Source: CafeF
Source: Vietnam Insider