WB raises Vietnam GDP forecast to 7.5%

By Bach Quang
Tue, August 9, 2022 | 10:14 am GMT+7

The World Bank has revised up Vietnam’s GDP prediction to 7.5% for this year, much higher than the forecast of 5.8% in early June as “economic activity continues to normalize.”

In April, the bank put its projection at 5.3%, and 4% in the worst-case scenario.

Growth drivers are expected to pivot from external to domestic demand, and from manufacturing to services.

“The recovery of services - so far, a laggard- is expected to pick up as consumers satisfy pent-up demand and foreign tourist arrivals rebound. In contrast, industrial production is expected to moderate as external demand weakens,” it said in a report named “Educate to grow” released Monday.

Vietnam’s economic expansion next year is estimated at 6.7%.

Vietnam's services sector activity is still recovering at a slower rate, 5.7% below pre-Covid trends, according to the WB. Photo courtesy of BRGMart.

Vietnam's services sector activity is still recovering at a slower rate, 5.7% below pre-Covid trends, according to the WB. Photo courtesy of BRGMart.

The World Bank’s latest forecast is the most optimistic among leading international institutions. The Asian Development Bank (ADB) maintainted its prediction for Vietnam's GDP growth this year at 6.5% in a report released on July 21, while revising down its forecast for developing Asia and the Pacific to 4.6% from 5.2% in April.

In the same month, Standard Chartered, HSBC, and IMF put their forecast at 6.7%, 6.9%, and 6%, respectively.

Vietnam aimed to achieve economic expansion of 7% this year, higher than the previously-set target of 6-6.5%, Minister of Planning and Investment Nguyen Chi Dung told a government meeting in early July.

The WB, however, noted that despite strong growth, the economy will not return to full potential in 2022.

The Vietnamese economy has rebounded swiftly, expanding by 5.2% in Q4/2021, 5.1% in Q1/2022, and 7.7% in Q2/2022.

While swift, the recovery remains both "incomplete and uneven", with aggregate output still 3.8% below pre-Covid trends and the services sector activity still recovering at an even slower rate, 5.7% below pre-Covid trends, according to the bank.

In the short run, the focus should be on full utilization of the Economic Recovery Support Program with a strong push on project implementation, it recommended. The program envisages increased investment in digital and physical infrastructure which would help bolster domestic demand recovery in the near-term while also boosting Vietnam’s long-term potential growth.

“In addition, expanding targeted social safety nets would not only help buffer the effects of the fuel price shock and rising inflation on poor and vulnerable households but cushion impacts on private consumption more effectively than the current untargeted cuts in the environmental protection tax and proposed cuts of value added tax (VAT) and import taxes. Heightened inflation risks call for agile monetary policies.”

Inflation is projected to accelerate to 3.8 percent in 2022 due to higher prices of energy, and rise further to 4 percent in 2023, before subsiding to 3.3 percent in 2024.

The State Bank of Vietnam put the country's inflation target at below 4%.

This baseline forecast is subject to significant global uncertainties with downside risks to growth, the WB added. These include the emergence and spread of new Covid-19 variants, persistent global inflationary pressures, and heightened geopolitical tensions and conflicts.

Amidst such global economic uncertainty, the recently-released EuroCham business climate index, which reflects European business confidence in Vietnam’s investment environment, dropped slightly in the second quarter of the year.

The index (BCI) declined 4.4 points over the first quarter to 68.8 points.

In contrast with earlier in the year, compounding factors such as the continuing war in Ukraine, commodity price spikes, and the ripple effect of China’s zero-Covid policy have dampened expectations among Vietnam’s European business community, the European Chamber of Commerce in Vietnam (EuroCham) said in a press release.

Although the BCI has fallen, it remains 7.6 points higher than in the fourth quarter of 2021, when it measured 61.0 points.

Comments (0)
  • Read More
Vietnam plans to spend over $2 bln on US agri imports

Vietnam plans to spend over $2 bln on US agri imports

Vietnam’s Ministry of Agriculture and Environment is expected to sign MoUs to purchase over $2 billion worth of U.S. agricultural, forestry, and fishery products.

Economy - Tue, June 3, 2025 | 10:01 pm GMT+7

New flight route to help Danang attract more wealthy tourists from Middle East

New flight route to help Danang attract more wealthy tourists from Middle East

The new Dubai-Danang flight route has been launched, paving the way for an influx of high-spending travelers from the Middle East and Europe to the central Vietnam city, one of the country's top tourist attractions.

Companies - Tue, June 3, 2025 | 9:13 pm GMT+7

Food giant C.P. Vietnam’s 'diseased' pigs improperly quarantine-stamped: authorities

Food giant C.P. Vietnam’s 'diseased' pigs improperly quarantine-stamped: authorities

The widely circulated images of diseased pigs from C.P. Vietnam, a subsidiary of Thailand’s food giant Charoen Pokphand Foods Public Company Limited (CPF), date back to 2022, but the pigs were improperly stamped, Vietnamese authorities stated on Tuesday.

Companies - Tue, June 3, 2025 | 5:36 pm GMT+7

Son Hai Group proposes expanding 263km stretch of Vietnam's North-South Expressway

Son Hai Group proposes expanding 263km stretch of Vietnam's North-South Expressway

Vietnam’s Son Hai Group is seeking Prime Minister Pham Minh Chinh's approval to invest in the expansion of a 263-kilometer stretch of the eastern section of the North-South Expressway.

Infrastructure - Tue, June 3, 2025 | 3:53 pm GMT+7

FedEx establishes direct serve in Vietnam on surging demand

FedEx establishes direct serve in Vietnam on surging demand

FedEx Express Corporation, one of the world’s largest express transportation companies, has transitioned to a direct-serve presence in Vietnam amid the Southeast Asian country’s growing international shipping demand.

Industries - Tue, June 3, 2025 | 2:55 pm GMT+7

Vietnam’s steel giant Hoa Phat to deliver thousands of containers to domestic shipping lines  

Vietnam’s steel giant Hoa Phat to deliver thousands of containers to domestic shipping lines  

Vietnam’s largest steelmaker, Hoa Phat Group, will supply thousands of containers to VIMC Container Transport JSC (VIMC Lines) and Vinafco Shipping JSC under recently signed contracts.

Companies - Tue, June 3, 2025 | 12:16 pm GMT+7

Shinhan Bank receives 'Fastest growing SME bank Vietnam 2025' award

Shinhan Bank receives 'Fastest growing SME bank Vietnam 2025' award

South Korea’s Shinhan Bank Vietnam Limited has been named the “Fastest Growing SME Bank Vietnam 2025” by World Economic Magazine (UK).

Companies - Tue, June 3, 2025 | 10:19 am GMT+7

Vietnam’s ‘shrimp king' Minh Phu expects to return to profit in 2025

Vietnam’s ‘shrimp king' Minh Phu expects to return to profit in 2025

Minh Phu Seafood Corporation (UPCoM: MPC), Vietnam’s leading shrimp exporter, expects net profit to reach VND997 billion ($38.03 million) this year, reversing the loss in 2024.

Companies - Tue, June 3, 2025 | 8:38 am GMT+7

CMC Corporation breaks ground on $300 mln technology hub in Hanoi

CMC Corporation breaks ground on $300 mln technology hub in Hanoi

Vietnam's leading technology firm CMC Corporation on Monday broke ground on its $300 million Hanoi CMC Creative Space (CCS Hanoi) project.

Industries - Mon, June 2, 2025 | 11:19 pm GMT+7

Thailand’s industrial output up after 9-month decline

Thailand’s industrial output up after 9-month decline

Thailand’s industrial output has turned positive for the first time in nine months, with the automotive sector rebounding after a 21-month slump, said Thai Deputy Finance Minister Paopoom Rojanasakul.

Southeast Asia - Mon, June 2, 2025 | 10:48 pm GMT+7

Singapore, France to expand cooperation in civil nuclear energy, defence technology, AI research

Singapore, France to expand cooperation in civil nuclear energy, defence technology, AI research

Singapore and France have upgraded their Strategic Partnership signed in 2012 to a Comprehensive Strategic Partnership (CSP), marking Singapore's first CSP with a European country.

Southeast Asia - Mon, June 2, 2025 | 10:47 pm GMT+7

Masan MEATLife stock jumps on continued profit momentum

Masan MEATLife stock jumps on continued profit momentum

The ticker of Masan MEATLife (MML), a subsidiary of Vietnamese consumer retail giant Masan Group, jumped by 8.71% to VND31,200 ($1.2) per share on Monday, after it reported profit for the third consecutive quarter in Q1/2025.

Companies - Mon, June 2, 2025 | 10:34 pm GMT+7

Vietnam's VSIP Binh Dinh industrial park seeks to become 'golden destination' for Thai firms

Vietnam's VSIP Binh Dinh industrial park seeks to become 'golden destination' for Thai firms

The Becamex VSIP Binh Dinh service-urban-industrial complex in the central province of Binh Dinh is emerging as a promising destination for Thai enterprises, said its developer Becamex Binh Dinh JSC.

Industrial real estate - Mon, June 2, 2025 | 10:24 pm GMT+7

Termination of feed-in-tariff mechanism a major bottleneck in Vietnam’s electricity transition: expert

Termination of feed-in-tariff mechanism a major bottleneck in Vietnam’s electricity transition: expert

A major bottleneck in Vietnam’s electricity transition has been the termination of the feed-in-tariff (FIT) mechanism in 2021, with no suitable replacement mechanism in place, according to the director of Hanoi-based Institute of Energy Technology.

Economy - Mon, June 2, 2025 | 4:56 pm GMT+7

Vietnam Vaccine JSC launches high-quality healthcare shop chain

Vietnam Vaccine JSC launches high-quality healthcare shop chain

Vietnam Vaccine JSC (VNVC), well known for its vacciation services, on Saturday launched its VNVC Shop, a chain offering safe, high-quality healthcare products from globally recognized brands.

Companies - Mon, June 2, 2025 | 4:05 pm GMT+7

Vietnam heavyweight PV Gas plans $3 bln investment over next 5 years

Vietnam heavyweight PV Gas plans $3 bln investment over next 5 years

PV Gas, a subsidiary of state-owned giant Petrovietnam, plans to make "strong investment" over the next five years in areas such as infrastructure and import-distribution of LNG.

Energy - Mon, June 2, 2025 | 2:01 pm GMT+7