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COVER STORY

about 5 per cent, which despite being short a historic low of 1.4 per cent. underem-
of the 6-7 per cent posted pre-pandemic ployment impaired domestic demand, as The risk of recession
was nonetheless an impressive result. did slow social support, while a strict lock- is still high, and
The second phase was when the fourth down caused labor shortages in Ho Chi inflationary pressure and
wave of Covid-19 hit at the end of April, Minh City and surrounding provinces.
disrupting many economic activities. GDP Trade sustained growth, with a mild surplus prices have been challenging
declined sharply, coming in at -6.17 per of $225 million posted for the first eleven over 2020 and 2021, but
cent in the third quarter over the same months. rapid vaccinations in September indicators show that Vietnam
period of 2020. It was the steepest decline and October slowed the spread of the virus
since 2000, when Vietnam began calcu- and the economy began to improve in the is a country with growth
lating and publishing quarterly GDP data. fourth quarter. “However, the prospect of opportunities and a fiscal
The third phase has been in place since a strong economic rebound in the fourth surplus.”
the end of September, when the economy quarter is clouded by high Covid-19 infection
began to witness some positive signs. rates, continued mobility restrictions in MR. KYLE F. KELHOFER,
According to a WB report released in some provinces, and limited labor supply Regional Director of the International
December, the industrial production index in key cities,” he said. “Further, slower- Finance Corporation (IFC)
rebounded strongly in november, proving than-expected disbursement of public invest-
its resilience once again. retail sales con- ment will hinder its intended boost to
tinued to improve, but have yet to recover domestic demand. The growth forecast for Governance Forum 2021 held on December
to november 2020 levels. Goods exports 2021 has been revised down from 3.8 per 10, Mr. Kyle F. Kelhofer, regional Director
hit a record $31.9 billion, helping to main- cent to 2.0 per cent. Subdued demand in of the International Finance Corporation
tain a trade surplus for a second consecutive Vietnam will hold inflation at 2.2 per cent (IFC), said that international organizations
month, while FDI commitments recovered in 2021; lower than the earlier forecast.” have forecast that Vietnam will experience
after a brief dip in October. Inflation ticked strong growth in 2022, as the country was
up due to fuel price hikes, recovering non- PROSPECTS FOR 2022 recovering quickly in the last quarter of
food domestic demand, and rising logistic At the recent national Assembly session, 2021, which creates momentum for the
costs, while credit growth remained stable, the government expected GDP growth to new year. “The risk of recession is still
providing ample liquidity to support econ- reach 6-6.5 per cent in 2022. “I think it is high, and inflationary pressure and prices
omy recovery. The government continued feasible, and I think that growth could have been challenging over 2020 and 2021,
its contractionary fiscal stance as the budget return to its pre-pandemic trajectory,” said but indicators show that Vietnam is a
balance posted another month of surplus, Mr. Morisset. “I believe and am very hopeful country with growth opportunities and a
driven by strong revenue collection. that the government will stimulate the fiscal surplus,” he said. “The problem is
“The world will grow at around 5 to 6 economy with spending and tax policies.” how to maintain the improvements in the
per cent in 2021 and Vietnam by around The ADB’s growth forecast for 2022 is economy in early 2022.”
2 per cent,” said Mr. Jacques Morisset, maintained at 6.5 per cent, as expanding Mr. Morisset also mentioned that exports
World Bank Lead Economist for Vietnam. vaccination coverage may drive GDP could be drivers in the short term. Vietnam’s
“In a normal year, it would be the reverse: upwards. Its inflation projection for 2022 export activities mainly depend on the
the world would be growing by 2 per cent is revised up to 3.8 per cent, on the volatility health of countries around the world and
and Vietnam by 6-7 per cent, so 2021 has of global price movements and pressure on FDI, because 80 per cent of exporters
been a tough year.” coming from a weaker VnD against the in the country are foreign enterprises.
Meanwhile, Mr. Andrew Jeffries, Asian uS dollar if capital outflows happen due It could also take advantage of oppor-
Development Bank (ADB) Country Direc- to a more front-loaded response of tunities from the green economy, he went
tor for Vietnam, said the 6.2 per cent con- advanced economies to curb inflation. on. Vietnam is among the countries most
traction in the third quarter dragged GDP Commenting on Vietnam’s economic affected by climate change, but it can also
growth for the first nine months down to outlook at the 2021 Annual Corporate view this as an opportunity. The government
implemented price subsidies for solar energy
in 2020 and helped businesses invest in
the energy source, and the private sector
GDP, 2011 - 2022 (%)
responded quite positively. Vietnam’s com-
8% 7.08 7.02 mitment at the recent 26th united nations
6.68 6.81 Climate Change Conference of the Parties

7% (COP26) in Glasgow was a historical turning
5.89 5.98 6-6.5
6% point in its climate change policy.
6.21 He also pointed out that the fact that
5% Vietnam is becoming a richer economy with
5.42
4% 5.03 a growing middle class is creating a sound
domestic market. “And if looking at the

3% main factors of growth and the main drivers
2.91
2.58 before the economic crisis, I think con-
2% sumption and investment by this middle

class with the creation and the operation of
1%
large domestic companies was the biggest
0% change in the Vietnamese economy,” he
added. “I believe these are going to be the
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022(f) drivers of the economy in the future.”
Source: General Statistics Office (GSO), World Bank In the long term, the transformation -
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