Both international and domestic experts shared the view that the Government’s GDP growth target of 6-6.5% for 2022 is within reach but would require substantial efforts to address existing bottlenecks.
|Production of electronics at Hoa Lac Hi-tech Park. Photo: Thanh Hai
Following the turbulent year of 2021, World Bank Lead Economist and Program Leader for Vietnam Jacques Morisset suggested the country’s GDP growth target remains feasible in case the country could effectively control the pandemic and ensure the balance of aggregates demand and supply.
According to Morisset, the country has taken drastic steps to boost the supply side, which has translated into positive results in trading activities, with a turnover of US$660 billion in 2021, up 21% year-on-year.
In 2022, the World Bank expert suggested Vietnam focus on stimulating domestic consumption, including the launch of additional financial support programs.
Given Vietnam’s ratio of public debt to GDP of 44%, lower than the threshold of 60% set by the National Assembly, Morisset expects Vietnam to have room to continue exercising further fiscal policy to stimulate demand.
The Asian Development Bank (ADB) in its latest economic outlook forecast Vietnam’s GDP to rebound to 6.5% in 2022, assuming there is no major outbreak from late 2021 on and speedy vaccination roll-out in the first half of 2022.
CEO of HSBC Vietnam Tim Evans gave a more optimistic view by noting the economic growth may hit 6.8% next year, driven by a return of strong FDI investment.
Meanwhile, a report from the Central Institute for Economic Management (CIEM) noted Vietnam’s strong macro-economic fundamentals mean the country continues to be an attractive destination for investors in the mid-and long term.
Moving forward, CIEM’s report expects Vietnam to give priority to the vaccination strategy as the key solution to address the pandemic.
“A flexible combination of fiscal and monetary policies, especially in support of small businesses and individual households are essential,” it added.
CIEM also raised the necessity for Vietnam to ensure greater efficiency in public investment and the ongoing economic restructuring process, noting digital transformation in institutional and administrative reforms are imperative.
Major driving forces for growth
The World Bank suggested a strong global economic recovery, especially in the US, EU, and China would lead to a growing demand for Vietnam’s exports.
Another key driving force for Vietnam’s growth comes from domestic demand, especially with a rapidly expanding middle class, which, the World Bank said, would serve as the foundation for the country’s further economic development in the coming time.
Nguyen Xuan Quang, vice director of the National Center for Socio-Economic Information and Forecast (NCIF) identified five potential economic sectors to spur Vietnam’s economic development in 2022, including construction, benefiting from the Government’s push for public investment; sectors with high contribution to exports of electronics, garment, fishery, wooden products, steel; beverage, retail and aviation; e-commerce and logistics; and IT.
Economist Can Van Luc, a member of the Government’s National Fiscal and Monetary Policy Advisory Council, stressed the country’s shift in Covid-19 strategy to flexible and safe adaptation to the pandemic is the key factor to ensure Vietnam’s strong economic growth in 2022.
“A right Covid-19 strategy and high coverage of vaccination would help push Vietnam’s GDP to up to 7%,” Luc told The Hanoi Times.
In the fourth quarter, Hanoi’s gross regional domestic product (GRDP) growth is expected to expand by 6.69% year on year, taking the growth rate in 2021 to 2.92%.
Despite the estimated figure is lower than the year's target of 7.5%, this remains a strong performance of the city as it push for the twin goals of both containing the pandemic and boosting growth at the same time.