Looking forward to Vietnam economic outlook

Vietnamese economy could get back to GDP growth of 6.8% in 2022. Photo: HCM City

>> Scenarios for Vietnam economy by end-2021

Vietnam economic recovery will be driven by a return to strong FDI investment into the market with a clear focus on the manufacturing sector which should further drive the Vietnamese export story especially as Free Trade Agreements that have been signed over the past 2 years start to bear fruit. 

The continued growth of the middle class and in particular the rising affluent sector will further drive the consumer story in Vietnam which will lead to changes in consumption as Vietnamese start spending more and more on leisure and travel.

Infrastructure roll-out will also continue to fuel economic activity especially in the renewables/green arena given the strong ambitions made by the Vietnamese authorities following COP26 where an aspirational target of 75% of all energy created in Vietnam is to be from renewable means by 2045. This is certainly very ambitious but anyone who has followed Vietnamese history knows that it is unwise to bet against the ability of Vietnam and the Vietnamese to achieve targets and challenges they set themselves.

There are a couple of areas that we will need to keep a watchful eye on which could potentially negatively impact the economy on a go-forward basis. One issue worth monitoring is the surging energy prices. As an example transport costs have risen rapidly and have become one of the main drivers for local inflation. Our current view is that a relatively gradual recovery in domestic demand might offset higher energy prices, and therefore we expect inflation to rise to 3.5% for 2022 which remains below government thresholds.

The big swing factor is sadly still Covid but my personal view is that on a go-forward basis, any outbreaks that need to be brought under control, will be done through targeted restrictions or lockdowns, rather than the blanket restrictions that many countries undertook in 2021 with a strong negative impact on their respective economies.

So as 2021 draws to a close, it is time to take a deep breath, believe that the worst really is behind us this time, that Vietnam will resume its economic cadence from 2019. I am informed by my team that given that we are about to start the Year of the Tiger, we can take some comfort from the spirit of the tiger which is – self-belief, willpower, courage, and personal strength. All attributes that should serve us well as we rise to the challenges of 2022 and start back on the road to a genuine recovery.

Room remains for Vietnam economy to end 2021 at high note

Vietnam economic outlook: Things gradually falling into place