Vietnam economic expansion could reach 6.9%: economic institute

Vietnam’s GDP this year could grow 6.9% in the best scenario, with inflation contained at 3.7%, an export expansion of 16.3% year-on-year, and a trade surplus of $2.7 billion, according to CIEM, a leading Vietnamese economic research institute.

A GDP growth of 6.9% is close to the government’s target of 7% that Minister of Planning and Investment Nguyen Chi Dung mentioned in early July. Previously, the government had set the target at 6-6.5%.

The Central Institute for Economic Management's (CIEM) base scenario put economic expansion at 6.7%, inflation 4%, export growth 15.8%, and trade surplus $1.2 billion.

Factors that would drive these figures include control of new Covid-19 variants, good progress in the execution of the government’s socio-economic development and recovery program, and macroeconomic stability to stablize market sentiment and tame inflation expectations.

Divesifying the markets to cash in on free trade agreements and handle risks derived from trade and technology disputes among economic powerhouses, and the trend of depreciation of currencies in regional countries are also highlighed as risks.

CIEM analysts said while Vietnam has experience in handling complicated pandemic fallouts and global economic recession risks, inflationary pressures are more visible.

"The top recommendation is control of inflation," said Nguyen Anh Duong, CIEM's head of research told a forum on Friday.

Tran Hong Minh, head of the institute, argued that the country should continue focusing on solidifying macroeconomic fundamentals and reforming its market economy institutions to be more friendly to innovations and green development.

Standard Chartered Bank last week put its GDP growth forecast for Vietnam this year at 6.7% and 7.0% for 2023. The country’s inflation in 2022 and 2023 is predicted at 4.2% and 5.5% respectively.

Tim Leelahaphan, an economist for Thailand and Vietnam at the bank, commented that the recovery may accelerate markedly in the second half, particularly as tourism reopens after a two-year closure, but rising global oil prices may have negative impacts on the economy.

Previously, HSBC had revised up Vietnam’s GDP prediction for 2022 from 6.6% to 6.9%, while International Monetary Fund put its estimation at 6%. The World Bank and the IMF expect Vietnam’s 2022 inflation to be contained at a maximum of 4%, which is the State Bank of Vietnam's target.

Vietnam's consumer price index (CPI) rose 2.96% in the second quarter and 2.44% in the first half year-on-year, relatively low compared to the same periods in pre-pandemic years, official data shows.