Vietnam: bright spot of world economic landscape

“Let Vietnam’s success story be told to the world,” said CEO of HSBC Vietnam Tim Evans at a conference between the Vietnamese Prime Minister and foreign-invested firms in early September.

Apart from him, representatives of many foreign financial organizations, officials and media also expressed their impression on Vietnam’s rapid recovery this year amid the global economic uncertainties.

Meeting President Nguyen Xuan Phuc as part of the APEC Economic Leaders’ Week 2022 in Thailand, Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva hailed Vietnam as a spotlight of growth and stability in the region, with an open and dynamic economy that is resilient to Covid-19 pandemic.

The IMF’s Asian Economic Outlook, released in October, forecast that Vietnam’s GDP growth will reach 7% this year, leading the group of five emerging economies in ASEAN (ASEAN-5). The World Bank also predicted that Vietnam’s economy will lead the East Asia-Pacific region with a growth rate of 7.2% in 2022. Japan’s Nikkei Asia said Vietnam’s post-pandemic recovery momentum tops the Southeast Asia and ranks eighth globally.

The brightest spot of the Vietnamese economy in 2022 is its ability to keep inflation relatively low as countries around the world are struggling with galloping inflation and spiraling prices.

Dominic Scriven, Executive Chairman of the UK’s Dragon Capital Group, said Vietnam seems less impacted by global uncertainties caused by food and energy crises this year. He lauded Vietnam as a major and stable manufacturer with relative energy production capacity while the volume of petrol import is not too large compared to the size of the whole economy.

According to the IMF’s report, Vietnam’s economy has recovered quickly following the easing of Covid-19 control measures, adoption of a strategy on living with Covid-19 and acceleration of the mass vaccination campaign.

The Vietnamese government has performed support policies such as low interest rates and strong credit growth, allowing businesses to quickly resume production when the economy reopened. Tax cuts and support for workers under the socio-economic recovery and development program helped the economy regain momentum.

Country Director of the Asian Development Bank in Vietnam Andrew Jeffries, said that the Vietnamese economy recovered faster than expected in the first half of the year. This result was supported by solid macroeconomic balances, flexible monetary policy and a steady recovery in the processing, manufacturing, services and domestic consumption sectors.

Vietnam’s prudent monetary policy and effective control of prices of petrol, electricity, food, health care and education services will keep inflation at 3.8% in 2022 and 4% in 2023, he said.

Prof. David Dapice from Harvard University’s Kennedy School of Public Policy pointed out that increasing FDI inflow into Vietnam has kept Vietnam’s economy in a better position compared to other economies. During the 11 months of this year, FDI disbursement rose by over 15% year-on-year. The WB also believed that investment is one of the four economic growth driving forces of Vietnam this year.

Sharing the same view, Vincenzo Caporale, an expert on the Southeast Asian studies, said Vietnam benefits from major companies moving production to the country to take advantage of its low costs, developed infrastructure, pro-business environment, and success in minimizing the pandemic’s economy impacts.

WB chief economist Andrea Coppola said the synchronous adjustment and coordination of policies to adapt to changes will be the key for Vietnam’s economy to overcome strong headwinds, both externally and internally, to continue to be a bright spot of post-pandemic growth.