Friday , June 21 2024

WB forecasts 5.5 pct growth for Vietnam

A World Bank (WB) report released Thursday projects Vietnam’s 2022 GDP growth at 5.5 percent if the Covid-19 pandemic is controlled.

The projection is lower than that of the Vietnamese government at 6.5-7 percent, HSBC at 6.5 percent and Standard Chartered by 6.7 percent.

Vietnam’s service sector is expected to recover once consumers and investors regain trust, and the country’s manufacturing industry will benefit because of stable demand from the U.S., the E.U. and China. The agriculture sector is expected to grow at the same rate as the 2020-2021 period, the report says.

Budget deficit and public debt are expected to be maintained with a debt-to-GDP ratio at 58.8 percent, it adds.

Vietnam’s economic recovery would also be aided by a more lax fiscal policy, at least for the first half of 2022. However, the uncertain trajectory of the Covid-19 pandemic continues to pose risks.

The report says that emergence of new variants may lead to new social distancing orders, which would impact economic activities. Lower demand from within the country may also affect its economic recovery.

As Vietnam’s commercial partners experience narrowing fiscal space, their capabilities to support their economy might be impacted if the Covid-19 crisis persists. This may also slow down global recovery and weaken demand for Vietnam’s exports, the report says.

The report calls for more focused support for businesses and people affected by Covid-19 to be deployed at a larger scale. It also says social welfare programs should accurately determine groups to support and deploy themselves more effectively to mitigate consequences of the crisis.

Vietnam posted GDP growth of 2.58 percent in 2021.

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