Ho Chi Minh City surprises with early economic recovery

“We forecast its GDP to marginally decline, and the positive result was unexpected”, Tran Hoang Ngan, head of the HCMC Institute for Development Studies, said at a meeting Tuesday.

Pointing out tax revenues increased by 9.4 percent year-on-year and industrial growth was 1 percent, he said these are signs the city’s economic revival programs have been effective.

Echoing Ngan, director of the city Department of Planning and Investment, Le Thi Huynh Mai, said the city is recovering faster than expected thanks to a 2.87 percent rally by the services sector.

The services sector accounted for 96.8 percent of growth, while around 98 percent of factories have resumed operations, she added.

Trade expanded by 3.5 percent to US$11.9 billion despite the impacts of Covid-19 and the conflict between Russia and Ukraine.

City party committee secretary Nguyen Van Nen expressed surprise at the performance, but warned against complacency saying there are growing challenges.

The country’s economy, due to its great degree of openness, is vulnerable to external shocks like the conflict, risk of Covid reemerging and China’s zero-Covid policy.

China is the second largest market for Vietnam and its largest source of goods.

Nen said some key metrics have yet to recover as expected, pointing out that sales of consumer goods and services declined by 4.8 percent and FDI fell by 40 percent.

People’s committee chairman Phan Van Mai called on related agencies to analyze and address key limitations to keep the city on the growth path.

He warned that surging raw materials costs threaten to cause inflation.