Vietnam’s economic recovery is likely to accelerate in 2022 as GDP growth is expected to rise to 5.5% from 2.6% in the year just ended, the World Bank’s economic update says.
Assuming the COVID-19 pandemic will be brought under control at home and abroad, the forecast envisions that Vietnam’s services sector will gradually recover as consumer and investor confidence firms, while the manufacturing sector benefits from steady demand from the United States, the European Union, and China. The fiscal deficit and debt are expected to remain sustainable, with the debt-to-GDP ratio projected at 58.8 percent, well below the statutory limit, according to the World Bank.
The outlook, however, is subject to serious downside risks, particularly the unknown course of the pandemic. Outbreaks of new variants may prompt renewed social distancing measures, dampening economic activity. Weaker-than-expected domestic demand in Vietnam could weigh on the recovery. In addition, many trading partners are facing dwindling fiscal and monetary space, potentially restricting their ability to further support their economies if the crisis persists, which in turn could slow the global recovery and weaken demand for Vietnamese exports.
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A high-level session of the Vietnam Business Forum commenced on February 21, during which business leaders and economic experts proposed a number of solutions to help the Government accelerate post-Covid economic recovery.
The event, titled “Recover the economy and develop the supply chain in the new normal”, was attended by Prime Minister Pham Minh Chinh. It comprised three main topics: contribution of the business community to economic recovery, role and duty of businesses in the stable and sustainable development of the global supply chain, and the position of domestic and foreign enterprises in the supply chain.
According to a report by the Saigon Times, the session mainly focused on improving the capacity of the domestic manufacturing sector and supporting industries, strengthening the collaboration between domestic and foreign enterprises, funding for industrial clusters and supply chains and taking advantage of digital technology in energy development.
In his opening remarks, Pham Tan Cong, chairman of the Vietnam Chamber of Commerce and Industry, gave a brief insight into the operations of businesses and the country’s economic situation.
“Five months ago, most businesses worried about the negative impact of the Covid pandemic, which forced many factories to shut down and caused disruptions in the supply chain. However, they have recovered strongly thanks to the improved anti-Covid situation, the resumption of production and trade and high vaccine coverage rates”, Cong said.
The country’s gross domestic product (GDP) grew 2.58% last year, while the total import and export turnover reached US$668.5 billion. The country targets a GDP growth rate of 6-6.5% this year.
“Despite some encouraging achievements, the Covid pandemic remains complicated with the emergence of the Omicron variant. The number of new Covid infections has increased drastically recently.” Cong added.
On January 30, the Government issued Resolution No. 11/NQ-CP on the measures for socio-economic recovery and development. Accordingly, the value added tax has been cut from 10% to 8%, and international air routes have been resumed since February 15.
According to Cong, recovering the supply chain plays a vital role in resuming production and trade. This will also offer opportunities for Vietnamese enterprises to strengthen their position in the global supply chain.
“The country met seven of 12 major economic indicators last year. Budget collection was 16.4% higher than the plan, import and export turnover soared 22.6%, and the manufacturing and processing industry grew 6.37%.” the Minister of Planning and Investment Nguyen Chi Dung said.
The business environment improved significantly. Some 160,000 enterprises were newly established or resumed operations last year.
The total registered capital of foreign invested projects reached more than US$31 billion, rising 9.2% year-on-year. This reflects the confidence of foreign investors in Vietnam’s economy.
The Minister stressed that the Vietnam Business Forum is a chance for the business community to propose solutions for socioeconomic recovery and development, improve the business environment and boost the private sector.
The event was attended by experts from the Organization for Economic Cooperation and Development, who came to discuss the role and duty of businesses in the stable and sustainable development of the global supply chain.
Discussions and recommendations from economic experts and business leaders at the forum are expected to help the Government successfully implement the program on socioeconomic recovery and development in the coming time, the Saigon Times reported.