WB raises Vietnam GDP forecast to 7.5%

By Bach Quang
Tue, August 9, 2022 | 10:14 am GTM+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
Trungnam Group's 'shortcomings' behind power purchase deadlock: deputy minister

Trungnam Group's 'shortcomings' behind power purchase deadlock: deputy minister

Trungnam Group's failure to complete required precedures has prompted Vietnam Electricity (EVN) to stop purchasing 40% of its solar farm's capacity, says a deputy minister of industry and trade.

Energy - Sun, October 2, 2022 | 11:21 pm GTM+7

Vietnam banking system's bad debts hit 1.7%

Vietnam banking system's bad debts hit 1.7%

The Vietnamese banking system's bad debt ratio remained safe at 1.7% by the end of July, the central bank says in a report sent to the National Assembly’s Economic Committee.

Banking - Sun, October 2, 2022 | 3:51 pm GTM+7

Vietnam earns $40.8 bln from agriculture, fisheries, forestry exports

Vietnam earns $40.8 bln from agriculture, fisheries, forestry exports

Vietnam earned $40.8 billion from exporting agriculture, forestry and fisheries products in the first nine months of this year, up 15.2% year-on-year.

Economy - Sun, October 2, 2022 | 2:22 pm GTM+7

70% of land for Hanoi's Ring Road 4 project ready by next June

70% of land for Hanoi's Ring Road 4 project ready by next June

Hanoi, Bac Ninh and Hung Yen authorities have committed to handing over 1,341 hectares of land, or 70%, before June 30 next year so the Hanoi Ring Road 4 project can break ground as scheduled.

Infrastructure - Sun, October 2, 2022 | 2:00 pm GTM+7

Formosa thermal power plant explosion kills worker

Formosa thermal power plant explosion kills worker

Three workers were conducting maintenance work on gas pipelines at Formosa’s thermal power plant in Ha Tinh province when an explosion occurred, killing one and severely injuring the other two.

Society - Sun, October 2, 2022 | 11:51 am GTM+7

Rules need to make public bond issuance outpace private placement: experts

Rules need to make public bond issuance outpace private placement: experts

Vietnamese regulators need to fasten and simplify legal steps to encourage public bond issuances as enterprises usually opt for private placements, say experts.

Finance - Sun, October 2, 2022 | 10:36 am GTM+7

VN-Index plunges to 30-month low

VN-Index plunges to 30-month low

Vietnam’s benchmark VN-Index fell almost 12% in September compared with August, making it the exchange's biggest one-month drop in 30 months.

Finance - Sun, October 2, 2022 | 8:47 am GTM+7

Vietnam welcomes 1.87 mln foreigners, South Koreans in the lead

Vietnam welcomes 1.87 mln foreigners, South Koreans in the lead

Vietnam welcomed 1.87 million foreign visitors in the first nine months of the year, up 16.4 times year-on-year, with South Korea and the U.S. leading the pack.

Travel - Sat, October 1, 2022 | 8:26 pm GTM+7

US firm Molex expands Vietnam facility with solar panel installation

US firm Molex expands Vietnam facility with solar panel installation

Molex, a U.S. manufacturer of electronic, electrical and fiber optic connectivity systems, has expanded its manufacturing facility in Hanoi with solar panel installation.

Industries - Sat, October 1, 2022 | 6:46 pm GTM+7

EVN, Trungnam Group hold talks on solutions for solar power usage deadlock

EVN, Trungnam Group hold talks on solutions for solar power usage deadlock

State-owned Vietnam Electricity (EVN) has asked Trungnam Group to put the 172-megawatt capacity portion without a pricing mechanism of its 450 MW solar farm in Ninh Thuan into the competitive power generation market.

Energy - Sat, October 1, 2022 | 3:54 pm GTM+7

Danish firm Spectre opens third Vietnam factory in An Giang

Danish firm Spectre opens third Vietnam factory in An Giang

Spectre, a Danish maker of functional garments for outdoor sports brands, started operating its $17 million factory in An Giang province Friday, the company’s third in Vietnam.

Industries - Sat, October 1, 2022 | 3:06 pm GTM+7

Foreign firm accountant gets death sentence in $9.6 mln corruption case

Foreign firm accountant gets death sentence in $9.6 mln corruption case

A Dong Thap province court on Friday handed a death sentence to Nguyen Trung Thanh, chief accountant of Filipino-invested Pilmico Vietnam, on corruption charges.

Society - Sat, October 1, 2022 | 2:43 pm GTM+7

Vietnam’s nation brand valued at $431 billion

Vietnam’s nation brand valued at $431 billion

Vietnam has seen the third biggest brand value gain over the course of the pandemic in absolute terms, up $184 billion year-on-year to $431 billion in 2022, says London-based Brand Finance.

Economy - Sat, October 1, 2022 | 11:22 am GTM+7

Former deputy health minister gets year off jail term

Former deputy health minister gets year off jail term

An appeals court in Hanoi has reduced the jail term for former deputy minister of health Truong Quoc Cuong to three years, one year less than sentence awarded by the court of first instance in May.

Society - Sat, October 1, 2022 | 11:05 am GTM+7

Fever cools, townhouse, villa segment turns lethargic in major cities

Fever cools, townhouse, villa segment turns lethargic in major cities

Liquidity in the townhouse and villa segment, once feverishly high in both Hanoi and Ho Chi Minh City, has been drying up in recent months.

Real Estate - Sat, October 1, 2022 | 9:50 am GTM+7

AES gets ministerial nod for 2,250 MW LNG power project in Binh Thuan

AES gets ministerial nod for 2,250 MW LNG power project in Binh Thuan

American energy corporation AES has received in-principle approval from the Ministry of Industry and Trade for its VND50,432 billion ($2.11 billion) Son My 2 LNG-to-power project in the south-central province of Binh Thuan.

Energy - Fri, September 30, 2022 | 9:24 pm GTM+7