Vietnam can grow 7.3-7.6% this year: BIDV research institute

Vietnam’s economic growth can reach 7.3%-7.6% this year in the most positive scenario, with inflation at 3.8%-4.2%, according to the BIDV Training and Research Institute.

An analysis of post-pandemic recovery by the institute outlines three scenarios for Vietnam’s GDP growth. In the most positive scenario with continued control of the pandemic, good implementation of the Program for Recovery and Development 2022-2023, and limited impacts of the Ukraine-Russia conflict, GDP growth can reach 7.3%-7.6%.

The report estimates growth at base and negative scenarios at 6.8%-7.1% and 6.3%-6.6%, respectively.

On inflation, the report notes that the consumer price index (CPI) in the second half of this year is likely to exceed the first half and end up at 3.8%-4.2%, close to the State Bank of Vietnam’s target of 4%.

High global inflation, rebounding aggregate demand in the country and improvement in cash conversion cycle are factors in this prediction. The cash conversion cycle is the amount of time a company needs or takes to convert funds invested in production and sales to cash. It is used to measure the company's efficiency in using its working capital.

Vietnam’s GDP growth and CPI reached 6.42% and 2.44% year-on-year, respectively, in the first six months of 2022, according to the General Statistics Office (GSO).

Dr. Pham The Anh, a lecturer at the National Economics University and chief economist at Vietnam Centre For Economic and Strategic Studies (VESS), argued that the second-quarter growth of 7.72%, a record high in 12 years, does not fully reflect developments in the country.

He told local media the figure "seems to be a bit exaggerated", given the big difficulties faced by businesses, though the economy is recovering compared to last year.

Major problems facing the economy in the rest of this year include skyrocketing prices of commodities (such as fuel and input materials) and high risks of stagflation in the U.S. and Europe.

HSBC this week revised up Vietnam’s GDP prediction this year from 6.6% to 6.9%, while IMF put its forecast at 6%. They expect Vietnam’s 2022 inflation to be contained at a maximum of 4%.

BIDV Training and Research Institute is a unit of BIDV, one of the biggest banks in Vietnam by assets, with the state being the majority shareholder.