The ADB has raised its growth forecast for the Vietnamese economy to 7.5% this year, up from 6.5% earlier in September, amid uncertainties in the global economy.

Source: ADO 2022 Supplement.

The inflation forecast for the country in 2022 was also revised downward, from 3.8% to 3.5%, well below the 4% threshold set by the National Assembly.

The figures were revealed in ADB's latest Asian Development Outlook Supplement (ADO) 2022, in which the bank has downgraded its economic growth forecasts for developing Asia and the Pacific amid a worsening global outlook.

In the first three quarters of 2022, the country's economy grew by 8.8%, thanks to strong performance across all sectors.

Economic activity picked up after lifting the Covid-19 restrictions and achieving vaccination coverage throughout the country. International tourist arrivals reached 2.4 million in the period from January to October.

Production at Garment 10 Company. Photo: Thanh Hai

Although trade continues to grow, there are signs of weakening global demand for Vietnamese exports.

The manufacturing PMI dipped from 50.6 in October to 47.4 in November, and employment fell for the first time in eight months.

Little liquidity is left for economic recovery after recent monetary tightening, a decline in corporate debt issuance from January to October, and a slowdown in the disbursement of public investment.

Growth for 2023 is therefore adjusted down to 6.3% as major trade partners weaken.

Worsening global conditions impact the region

According to the report, the region's economy will grow by 4.2% this year and 4.6% next year, less optimistic figures than the September forecast of 4.3% for 2022 and 4.9% for 2023.

Monetary policy tightening by central banks globally and in the region, the Russia-Ukraine conflict, and recurring lockdowns in China are slowing down developing Asia’s recovery from the Covid-19 pandemic. Restrictions under the “zero-Covid” approach, along with a struggling property market, have led to another downgrade of China’s growth outlook, it said.

“Asia and the Pacific will continue to recover, but worsening global conditions mean that the region’s momentum is losing some steam as we head into the new year,” said ADB Chief Economist Albert Park. “Governments will need to work together more closely to overcome the lingering challenges of COVID-19, combat the effects of high food and energy prices—especially on the poor and vulnerable—and ensure a sustainable, inclusive economic recovery.”

The ADB lowered its inflation forecast for developing Asia-Pacific countries for this year from 4.5% to 4.4%. However, the bank raised its projection for next year to 4.2% from 4.0% due to persistent inflationary pressures from energy and food.

In stark contrast to the grim regional outlook, the growth forecast for Southeast Asia in 2022 was raised to 5.5% from 5.1%, amid robust consumption and tourism recovery in Malaysia, the Philippines, Thailand, and Vietnam.