ADB revises Vietnam economic expansion forecast to 7.5%

The Asian Development Bank (ADB) on Wednesday raised its Vietnam GDP forecast for this year from 6.5% to 7.5% in September, while lowering its prediction for developing Asia and the Pacific amid a worsened global outlook.

"Vietnam's economy is performing well amid uncertainties in the global economy, risks to the economic outlook have become elevated," the ADB said in a release.

Its forecast for Vietnam's inflation in 2022 has been revised down to 3.5%, while the State Bank of Vietnam's target is 4%.

The bank has lowered its economic growth forecasts for developing Asia and the Pacific to 4.2% this year and 4.6% next year, from 4.3% and 4.9%, respectively forecast in September.

Monetary policy tightening by central banks globally and in the region, the protracted Russian invasion of Ukraine, and recurring lockdowns in China are slowing developing Asia’s recovery from the pandemic, according to the ADB.

Restrictions under the “zero-Covid” approach, along with a struggling property market, have led to another downgrade of China’s growth outlook.

“Asia and the Pacific will continue to recover, but worsening global conditions mean that the region’s momentum is losing some steam as we head into the new year,” said ADB chief economist Albert Park.

“Governments will need to work together more closely to overcome the lingering challenges of Covid-19, combat the effects of high food and energy prices - especially on the poor and vulnerable - and ensure a sustainable, inclusive economic recovery.”

ADB lowered its forecast for inflation in developing Asia and the Pacific this year to 4.4% from 4.5%. However, the bank raised its projection for next year to 4.2% from 4.0%, due to lingering inflationary pressures from energy and food.

China's economy is forecast to expand by 3.0% this year, compared with a previous projection of 3.3%. The forecast for next year was cut to 4.3% from 4.5%, due to the global slowdown.

GDP growth projections for India were maintained at 7.0% this fiscal year and 7.2% for the next.

Even with the downgraded forecasts, developing Asia will still do better than other regions globally, both in terms of growth and inflation.

ADB’s growth forecast for Southeast Asia this year was raised to 5.5% from 5.1%, amid robust consumption and tourism recovery in Malaysia, the Philippines, Thailand, and Vietnam. Projections for next year, however, were lowered to 4.7% from 5.0% due to weakening global demand.

Though trade continues to expand, signs show weakening global demand for the country’s exports. Growth for 2023 is therefore adjusted down to 6.3% as major trade partners weaken.

Developing Asia refers to the bank’s 46 developing members.

The government has put Vietnam’s GDP growth forecast for this year at 8%, higher than its target of 6-6.5%. The figure is higher than the predictions of some international institutions.