Vietnam’s GDP growth to be well above 6.5% target, forecast experts

The Vietnamese economy is well on course to cushion COVID-19 impact and meet its GDP growth target for 2022. (Photo: Minh Luu & AA+Photography)

Economic recovery well on course

The General Statistics Office of Vietnam announced over a week ago that the national economy expanded by an estimated 7.72% in the second quarter and 6.42% in the first half of the year. Immediately after this, international financiers and economic experts moved to revise their forecasts, expressing their optimism about the country’s strong economic recovery moving forward.

In its economic update Vietnam At A Glance, the Hong Kong and Shanghai banking Corporation (HSBC) raised Vietnam’s GDP growth forecast for this year to 6.9% from its 6.6% prediction in the previous update, well above the 5.9% forecast by international financial institutions.

HSBC experts explained that the country’s successful control of the COVID-19 pandemic coupled with the easing of post-pandemic restrictions has enabled the ailing economy to gradually gather full steam. In line with this, tourism services have mostly benefitted from the Government’s decision to reopen its economy, while exports hit a record high fueled by a sharp rise in production.

Elsewhere, Singapore-based United Overseas Bank (UOB) lifted Vietnam’s projected GDP growth this year to 7% thanks to impressive economic growth recorded in the second quarter of the year. The bank predicted that the economy would edge up by around 7.6% to 7.8% in the second half of the year provided the country does not suffer any further disruptions due to COVID-19.

Kuala Lumpur-based Malayan Banking Berhad (Maybank), a global financier of Malaysia, also raised its GDP growth forecast for Vietnam from 5.8% to 6.9% this year following the release of positive economic gains recorded in the first six months of the year. However, the bank’s research group noted that the economy’s momentum moving forward could be affected in the second half of the year by slowing global growth, as well as rising prices that look set to impact household consumption.

Optimistic on positive outlook

Agreeing with this positive outlook, economist Can Van Luc and other experts believe that the national economy will continue to rebound ahead in the second half on the back of its competent pandemic control and sound socio-economic performance.

The experts said that whole-year GDP is projected to grow by 6.8% to 7.1%, 1% higher than the April forecast in a base scenario. This rises to between 7.3% and 7.6% in the positive scenario in the event that disease control is maintained, the economic recovery programme is soundly implemented, and negative impacts from the Russia-Ukraine conflict are minimised.

In an interview granted to local media outlets, economist Vo Tri Thanh even forecast that GDP growth this year would increase by 9% as the national economy is well on course to reach its pre-pandemic level.

“The above forecast is not groundless, because when there is nothing special the economy grows better in the second half of the year,” Thanh analysed. “There are forecasts that GDP could grow above 8% or more in the third quarter this year compared to a contraction of the same period last year. If the rate is maintained by 6% to 7% in the fourth quarter, it is likely that the economy will grow around 7% for the whole year.”

The leading economist also warned about internal and external risks that could potentially have a negative effect on national economic recovery moving into the second half, such as inflation control, decreasing purchasing power, and high interest rates by banks.

Moreover, economist Can Van Luc and other experts shared the view that in a negative scenario, GDP this year is forecast to grow by 6.3% to 6.6% with external risks increasing, the COVID-19 outbreak reoccurring, and the recovery programme slowing.

In a recent monthly meeting, the Government agreed with the Ministry of Planning and Investment’s proposal to strive for GDP growth of 7% this year, a figure which is 0.5% higher than the Government set target and 1% higher than the target previously approved by the National Assembly.

Accordingly, the Ministry of Planning and Investment has proposed two scenarios for economic growth in the second half of the year. In the first scenario, GDP in the third and fourth quarters is set to grow by 7.9% and 5.5%, respectively, to achieve the 6.5% goal for this year. In the second scenario, GDP in the third and fourth quarters needs to expand by 9% and 6.3%, respectively, to achieve a whole year GDP increase of 7%.