The World Bank (WB) forecast Vietnam will achieve gross domestic product (GDP) growth of 7.5 percent in 2022 despite unpredictable changes in the global economy and escalating inflation in many countries. This was good news for Vietnam on the occasion of its September 2 National Day celebration.
Firm stand against COVID-19
In 2020 and 2021, the world suffered heavy impacts from the unprecedented COVID-19 pandemic. While many countries faced negative economic growth, the Vietnamese economy recorded positive growth for two consecutive years.
With a GDP growth of 2.91 percent, Vietnam was one of the economies with the highest growth in 2020. In 2021, many countries, including Vietnam, continued to apply strict restrictions to prevent the spread of the Delta coronavirus variant, which adversely affected production and trade as well as export growth. Despite these unfavorable conditions, the Vietnamese economy grew 2.58 percent.
The WB said the satisfactory results Vietnam achieved during the last two years tell a success story stemming from sound economic reforms and efforts to accelerate international integration, which have helped one of the poorest nations in the world become a middle-income country within a generation.
Economists attribute the results to government policies on business support and investment environment improvement helping maintain the Vietnamese economy’s growth in the context of unpredictable global changes.
Although the pandemic is under control, the global economy still faces unpredictable developments due to the tensions between Russia and Ukraine, which have pushed energy prices up and thereby increased production costs.
The escalation of energy prices has also led to high inflation in many countries. According to economist Nguyen Bich Lam, former general director of the General Statistics Office of Vietnam under the Ministry of Planning and Investment, inflation in the US and the EU has reached the highest level in more than four decades. In June 2022, the US faced an inflation rate of 9.1 percent. In July 2022, inflation in the EU reached a record high of 8.9 percent.
Economic recovery effects
In this context, many domestic and foreign economic organizations raised concerns about a period of global economic recession. In July, the International Monetary Fund (IMF) lowered the 2022 global growth forecast to 3.2 percent against the 3.6 percent forecast made in April. The WB also lowered its global economic growth forecast from 4.1 percent in January to 2.9 percent in June, due to concerns about the Russia-Ukraine war.
In the first half of 2022, the Vietnamese economy grew by 6.42 percent (5.03 percent in the first quarter and 7.72 percent in the second quarter, the highest second-quarter growth since 2011). According to Nguyen Thi Huong, Head of the General Statistics Office of Vietnam, the Vietnamese economy has recovered quickly after struggling with COVID-19 for two years.
While most 2022 global economic growth forecasts have been lowered, international organizations have raised their forecasts for Vietnam. In the WB’s latest economic update for Vietnam, Carolyn Turk, WB Country Director for Vietnam, said that while the world economy is facing numerous challenges related to the tensions between Russia and Ukraine, which affect global supply chains, the Vietnamese economy is forecast to grow 7.5 percent in 2022 and 6.7 percent in 2023 given the domestic consumer demand and positive GDP growth in 2021.
The IMF also forecast Vietnam’s GDP will grow six percent in 2022 and 7.2 percent in 2023, given the actual situation of retail sales and the recovery of industrial production and trade.