Vietnam strives for 7% GDP expansion this year

Vietnam, one of the world’s fastest-growing economies, is eyeing economic growth of 7% this year, higher than the previously-set target of 6-6.5%.

Addressing a government meeting Monday, Planning and Investment Minister Nguyen Chi Dung mentioned the higher GDP goal while giving an update on the socio-economic situation.

Vietnam’s economy is recovering in the post-pandemic period after expanding only 2.58% last year, its slowest growth rate in decades. The country posted GDP growth of 7.72% in the second quarter of this year, driven by strong export growth; and the first half’s expansion was 6.42%, higher than the 5.1-5.7% target.

To secure the new GDP goal for the whole year, year-on-year economic expansion in the third and fourth quarters needs to be 9% and 6.3%, respectively, the minister said.

He added the country’s budget was in surplus, paving the way for fiscal policy to be used to support businesses and people. However, he warned of upward inflation pressure for the rest of the year.

Other risks that may hinder economic recovery include pandemic-related issues, local labor shortages, material supply, increasing production costs, and uncertainties in the stock market.

CPI in the first six months rose 2.44% on average against the same period last year. While the current inflation rate remains below the central bank's 4 percent target, HSBC in mid June said it expects persistent high energy prices will continue to push overall prices up.

The World Bank on June 7 raised Vietnam’s GDP prediction this year to 5.8% from 5.3% in its April forecast. The revision derives from a revival of activity supported by the removal of Covid-related restrictions in the country. “Vietnam's economic expansion is expected to strengthen further to 6.5% in 2023 and 2024.”

Credit rating agency S&P Global Ratings in late May revised up the country’s long-term sovereign credit rating to BB+, a "stable" outlook. Vietnam is one of only two economies in the Asia-Pacific region to have been upgraded since the beginning of the year, the other being Taiwan.