Vietnam economy to recover strongly in 2022: ADB

By Thanh Khe
Wed, May 25, 2022 | 3:17 pm GMT+7
Roads and buildings in Hanoi. Photo by The Investor/Trong Hieu.

Roads and buildings in Hanoi. Photo by The Investor/Trong Hieu.

Vietnam's economy is expected to rebound strongly in 2022 and even grow further in 2023, said ADB analysts.

"Despite the difficulties and challenges posed by the pandemic, Vietnam's financial markets remain resilient in 2021 and 2022 owing to a solid economic foundation," Andrew Jeffries, ADB Director in Vietnam, said on Wednesday at the ADB-BIDV forum "Vietnam Financial Markets in 2021 and Outlook for 2022".

According to ADB, the global economic and geopolitical context has become increasingly complex. "Rising costs of goods and services, particularly oil prices, global supply chain disruption, and rapid tightening of wealthy nations' fiscal and monetary policies have exacerbated inflationary pressures. These factors have hampered global economic recovery and raised financial and monetary risks."

In this context, Vietnam's growth momentum has been maintained by macroeconomic stability, the bank stated in a release.

Commercial banks recorded a 39% jump in net profit margins in 2021 compared to 2020. Stock market capitalization grew by 48%, while the insurance industry grew by 19%, compared to a 14% rise in 2020.

"However, risks are emerging in the financial markets. Bad debts are likely to grow rapidly following the expiration of several regulatory policies at the end of 2021. Recent frauds in the corporate bond market indicated shortcomings in corporate governance and regulatory gaps."

Vietnam's financial market in 2022 would benefit from the recovery, but it will also experience several downturns in line with the global trend. Along with government efforts to rectify the market, it is expected to develop more stable, healthy, and sustainable, the bank noted.

"The banking industry's profitability is forecast to increase by 20-25% on average in 2022, with credit growth reaching 14-15%. The stock market is predicted to undergo various adjustments, becoming stable and healthy. VN-Index may rise 8% to 1,610 points in an optimistic scenario or fall 4% to 1,440 points in a negative situation."

The volume of government bond issuance is likely to remain constant due to the lower number of mature government bonds compared to previous years. The corporate bond market is expected to expand in a more transparent, healthier manner as stricter regulations are enacted, coupled with improved management and supervision to reduce risks for participants.

Meanwhile, the insurance sector is forecast to sustain its growth momentum, with premium income climbing by 18-20%, and life insurance serving as the main driver, ADB added.

Prime Minister Pham Minh Chinh on April 22 said that bringing violations to light will help safeguard legitimate investors and keep the bond and stock markets healthy. Chinh was referring to some arrests by the investigative agency for alleged market manipulation and violations of information disclosure.

Previously, Do Thanh Nhan, Chairman of Louis Holdings, and Do Duc Nam, General Director of Tri Viet Securities, were arrested for allegedly manipulating the stock market. On April 14, Dang Nhu Quynh, a well-known Facebook blogger in Hanoi, was detained over accusations of using social media to disseminate "unverified" information that caused harm to the stock market.

Do Anh Dung, Chairman of property developer Tan Hoang Minh Group, was arrested on April 5 by investigative police for "defrauding to appropriate property". On March 29, Trinh Van Quyet, Chairman of developer FLC Group was detained on charges of "manipulating" and "concealing information in securities activities".

ADB predicted that Vietnam's economy would improve in 2022, with growth reaching 5.5-6% and maybe higher in 2023. However, inflation is expected to rise substantially, probably to 3.8-4.2% in 2022 and maintain at 4% in 2023.

World Bank in April lowered Vietnam’s 2022 GDP projection to 5.3% due to challenges in terms of rising Covid-19 infections and the country’s vulnerability to external shocks driven by its high economic openness. This estimation is much lower than that of other international institutions.

Deputy Prime Minister Le Van Thanh on Monday told the ongoing National Assembly session the 6-6.5% economic growth objective and the risk of rising inflation driven by domestic demand recovery have become "significant challenges" for Vietnam.

Comments (0)
  • Read More
Construction trio keen on building $1.5 bln expanded expressway in southern Vietnam

Construction trio keen on building $1.5 bln expanded expressway in southern Vietnam

Three construction majors in Vietnam are interested in building an expanded expressway connecting Ho Chi Minh City with the Mekong Delta provinces of Long An and Tien Giang for an estimated VND38.6 trillion ($1.52 billion).

Infrastructure - Tue, November 19, 2024 | 8:18 pm GMT+7

Singapore, Germany upgrade relations to strategic partnership

Singapore, Germany upgrade relations to strategic partnership

Singapore and Germany have decided to elevate their ties to a Strategic Partnership to promote closer cooperation in areas of mutual interest such as security, artificial intelligence (AI) and clean energy.

Southeast Asia - Tue, November 19, 2024 | 8:01 pm GMT+7

Thailand’s rice shipment up 20% in 10 months

Thailand’s rice shipment up 20% in 10 months

Thailand exported 8.37 million tons of rice in January-October, a year-on-year increase of 20%, according to the Ministry of Commerce.

Southeast Asia - Tue, November 19, 2024 | 8:00 pm GMT+7

Vietnam’s inconsistent legal framework poses problems for FDI sector: Deep C exec

Vietnam’s inconsistent legal framework poses problems for FDI sector: Deep C exec

Vietnam’s legal framework lacks consistency and the foreign direct investment (FDI) sector will soon face challenges related to the Law on Environmental Protection, says Bruno Jaspaert, CEO of Deep C Industrial Zones.

Economy - Tue, November 19, 2024 | 6:30 pm GMT+7

Vietnam shares sink on extended foreign selloffs

Vietnam shares sink on extended foreign selloffs

Vietnamese equities fell for a fourth consecutive day on Tuesday as foreign traders extended their selling spree.

Finance - Tue, November 19, 2024 | 5:10 pm GMT+7

Germany’s household product firm QuickPack to invest $32 mln in Vietnam

Germany’s household product firm QuickPack to invest $32 mln in Vietnam

Germany’s QuickPack, a specialist for household goods and hygiene products, will invest €30 million ($31.8 million) in Vietnam’s Mekong Delta province of Long An.

Industries - Tue, November 19, 2024 | 4:24 pm GMT+7

Malaysian millionaire willing to invest in convicted Vietnamese tycoon’s property project: lawyers

Malaysian millionaire willing to invest in convicted Vietnamese tycoon’s property project: lawyers

Malaysian millionaire Vincent Tan has evinced investment interest in a residential project owned by convicted tycoon Truong My Lan, chairwoman of Van Thinh Phat Group, lawyers for the latter have disclosed.

Real Estate - Tue, November 19, 2024 | 4:17 pm GMT+7

‘Bottleneck of bottlenecks’ continues to dog Vietnam's property, infrastructure projects

‘Bottleneck of bottlenecks’ continues to dog Vietnam's property, infrastructure projects

Limited consultations between state agencies and the parliament’s primary focus on wording are issues with Vietnam’s legal framework adversely affecting property and infrastructure projects, say experts and corporate leaders.

Economy - Tue, November 19, 2024 | 3:40 pm GMT+7

President Xi Jinping hastens construction of 3 Vietnam-China rail routes

President Xi Jinping hastens construction of 3 Vietnam-China rail routes

Chinese President Xi Jinping has called for more substantial cooperation between China and Vietnam, including the pacier implementation of three railway routes linking the two nations.

Infrastructure - Tue, November 19, 2024 | 3:08 pm GMT+7

Vietnam developers offer deferred principal payments, interest support to boost year-end sales

Vietnam developers offer deferred principal payments, interest support to boost year-end sales

Vietnamese housing developers are offering several incentives including deferred principal payments and interest support to stimulate demand and boost liquidity as the year nears its end.

Real Estate - Tue, November 19, 2024 | 2:29 pm GMT+7

Australia's EQ Resources acquires TMG Group with Vietnam-based ferrotungsten factory

Australia's EQ Resources acquires TMG Group with Vietnam-based ferrotungsten factory

Australia-based EQ Resources Limited has acquired its fellow firm Tungsten Metals Group (TMG), which owns and operates the largest ferrotungsten (FeW) factory outside China.

Companies - Tue, November 19, 2024 | 11:00 am GMT+7

Techcom Securities becomes largest broker in Vietnam by capital base

Techcom Securities becomes largest broker in Vietnam by capital base

Techcom Securities JSC (TCBS) has become the largest securities company in Vietnam by charter capital after finishing a rights offering last week.

Finance - Tue, November 19, 2024 | 9:11 am GMT+7

Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam airport operator ACV looks to better exploit non-aviation service potential: exec

Vietnam's airports operator ACV expects to earn $145 million from non-aviation services this year, accounting for around 18.83% of its total revenue, which is modest compared to other countries, said deputy general director Nguyen Duc Hung.

Companies - Tue, November 19, 2024 | 7:45 am GMT+7

The Investor to host seminar on removing legal bottlenecks for infrastructure, property investment

The Investor to host seminar on removing legal bottlenecks for infrastructure, property investment

A seminar themed “Removing legal bottlenecks for infrastructure and property investment” will be organized by The Investor in Hanoi on Tuesday.

Companies - Tue, November 19, 2024 | 7:00 am GMT+7

Indonesia promises Asia-Pacific investors more incentives

Indonesia promises Asia-Pacific investors more incentives

Indonesian President Prabowo Subianto recently told the press that he will create more incentives and expand special economic zones (SEZs) so as to lure investors from Asia-Pacific.

Southeast Asia - Mon, November 18, 2024 | 11:01 pm GMT+7

Indonesia, Brazil enhance aviation cooperation

Indonesia, Brazil enhance aviation cooperation

Indonesia's state-owned aircraft manufacturer, Dirgantara Indonesia (DI), and Brazilian aerospace company Embraer have signed a memorandum of understanding (MoU) to expand collaboration in the commercial aviation sector.

Southeast Asia - Mon, November 18, 2024 | 11:00 pm GMT+7