Tighter restrictions in early 2021 as a result of Covid-19 outbreak have weighed on Vietnam’s economic activity, resulting a GDP growth forecast of 7% this year, lower than the previously estimated 7.6%, and then moderate to 6.5% in 2022, according to HSBC’s report.

A flare-up in Covid-19 infections has also taken its toll in other member countries of ASEAN, leading to HSBC’s revision of growth forecast for ASEAN overall from 5.6% down to 5% in 2021. In this context, Vietnam is expected to remain the fastest-growing economy with estimated GDP growth of 7% among major countries in ASEAN this year, significantly higher than the likes of Malaysia (6.7%), the Philippines (6.5%), Singapore (6.5%), Indonesia (4.9%), and Thailand (3.6%).

 In the Asia-Pacific region, India is set to record a strong recovery from a contraction of 6.3% in 2020 to a growth of 11.2%, the highest in the region, followed by China at 8.5% in second, while Vietnam and Sri Lanka shared the third place at 7%.

According to HSBC’s latest forecast, almost all economies in Asia should reach their pre-pandemic level by the end of 2021, if they have not already. The only exceptions are Japan and Thailand (next year), and the Philippines (beyond 2022).

In the 2021-2022 period, Vietnam’s inflation  would continue to stay under control at respective rates of 3% and 3.5%, lower than the government’s target of 4%.

Given the positive outlook for economic growth in Asia, HSBC predicted higher global growth forecasts for 2021 and 2022 at 3.8% and 3.6%, respectively, representing 0.2 and 0.1 percentage points higher than previous estimates.

This year, the government aims for an economic growth of 6.5%, 0.5 percentage points higher than the target set by the National Assembly.