Prospects for economic recovery this year look bright

Workers in HCM City make shoes for export to the EU market last year. — VNA/VNS Photo Trần Việt

The rebound in consumption, strong export growth and public spending would be key factors in Việt Nam’s economic recovery this year, analysts said.

Nguyễn Phước Hưng, vice chairman of the HCM City Business Association said that Việt Nam’s exports would continue to outperform the region by benefiting from cost competitiveness and a number of major free trade agreements.

The trade deals the country had signed had opened up access to countless markets, he said.

Despite a major outbreak of COVID-19 last year exports rose by 19 per cent to US$336.3 billion for a trade surplus of $4.08 billion, he pointed out.

Foreign investment is also forecast to pick up this year, according to Hưng.

Most small and medium-sized enterprises still lack labour and capital.

Enterprises should be prepared to deal with unexpected hurdles like the rising oil prices and long-term impacts of the sanctions on Russia by persifying export markets, Hưng said.

They should embrace digital transformation and e-commerce.

Nguyễn Đặng Hiến, general director of Tân Quang Minh Ltd, said the pandemic had disrupted global supply chains and urged the company to look for alternative sources.

"The imports of raw materials face delays due to the conflict and increases in transportation costs.

“My company has shifted to buying domestic raw materials to cut costs and transport time.”

Nguyễn Tú Anh, director of the Communist Party economic commission’s general economic affairs department, said most businesses resumed normal operations at the end of 2021.

As of the end of last year the country had 854,000 enterprises, and the number was on the rise, he said.

Tourism to rebound

The services and tourism sectors are expected to recover this year since the country has announced a road map to reopen the tourism industry starting on Tuesday and plans to remove most entry restrictions for visitors.

International flights have resumed, an important factor in the recovery of tourism and business investment.

Deputy Minister of Planning and Investment Trần Quốc Phương said the recent Government support package of VNĐ350 trillion ($15.42 billion) would play a major role in reviving the economy.

Trần Du Lịch, a member of the Prime Minister’s economic advisory group, said HCM City was hit hard by the pandemic and so required more intensive recovery policies.

Removing problems hindering public and private investments, and providing financial support to small businesses were needed to speed up recovery, he said.

The economy was very likely to achieve the targets set for this year, but it was very important to accelerate public investment in key projects, he warned.

Major projects included Ring Road Nos 2 and 3, clearing slums along canals and developing social housing.

It was also important to control land prices, he added.

Experts said the Russia-Ukraine conflict was unlikely to have a significant direct impact on Vietnamese businesses, but warned they must prepare for the long-term impacts.

International organisations are optimistic about the recovery of the Vietnamese economy with Fitch Ratings being the most upbeat, saying it is set to grow by 7.9 per cent this year and 6.5 per cent next year. — VNS