Ships unload goods at the Cai Lai Port in HCM City, December 24, 2021. Photo: VnExpress

Despite a slew of challenges and risks, the Vietnamese economy in 2022 is expected to bounce back, with some of its primary growth drivers coming from industries driven by the Covid-19 pandemic, industry experts have said, as cited by VOV.

Economy recovers thanks to macroeconomic stability

Economists predict that the local economy will recover and regain its growth momentum in 2022 thanks to the macroeconomic stability it maintained in 2021.

Last year saw the export turnover of goods stand at an estimated US$336.25 billion, up 19% compared to the previous year, thereby making Vietnam the 22nd largest export economy in the world.

With such encouraging results, exports are set to continue to represent the growth engine for the Vietnamese economy in 2022, creating opportunities for businesses to promote exports in the coming time.

Amid production and supply chain disruptions caused by the pandemic, Vietnam managed to maintain stable prices of essential commodities, helping contain the inflation rate below 2%.

Furthermore, the foreign exchange reserve level of more than US$100 billion, coupled with the increase in value of the domestic currency (VND) by approximately 1% against the US dollar, has also contributed to stabilizing the macroeconomy and controlling inflation in general.

Apart from regulating monetary and fiscal policies, the government introduced a number of policies aimed at reducing lending interest rates, supporting social security, curbing the budget deficit, and drastically promoting public investment. These policies have all served as crucial foundations for the local economy to overcome difficulties and gather steam following the containment of the pandemic.

Prof. Dr. Hoang Van Cuong, vice president of the National Economics University, emphasizes that the macroeconomic stability with all indexes controlled within limits has helped to consolidate the confidence of financiers in the Vietnamese investment climate, thus facilitating the greater flow of foreign investment in the future.

Workers seen at a construction site in Hanoi in November 2021. Photo: VnExpress

Risks remain in 2022

Apart from growth opportunities, Nguyen Minh Cuong, chief economist of the Asian Development Bank (ADB), also warns of a number of risks faced by the country that could primarily arise from the financial system due to rising bad debts coupled with asset bubbles and fluctuations occurring in the stock market.

Moreover, Cuong points out that the implementation of public investment and bailout packages remains sluggish, noting that the timely disbursement of the economic recovery scheme is of great significance in 2022 and 2023.

How will GDP grow ahead in 2022?

With regard to Vietnamese economic growth scenarios in the year ahead, the Asian Development Bank (ADB) projects that Vietnamese GDP growth would stand at 6.5%.

According to the ADB, export activities will continue to represent a growth engine thanks to the utilization of numerous free trade agreements.

Meanwhile, HSBC says that the local economy can regain its GDP growth rate of 6.8% this year, largely mainly thanks to strong foreign investment flow, with a specific focus on the manufacturing sector and green development.

Dr. Can Van Luc, a member of the National Monetary and Financial Policy Advisory Council, reveals that the national economy is gradually gathering full steam, particularly after the Government issued Resolution No 128 on living safely with the Covid-19 pandemic.

This change has had a positive impact on the macroeconomy as GDP in the fourth quarter grew by 5.22% against the same period from the previous year, helping GDP for the entire year grow by 2.58%.

Moving forward, the Vietnamese economy in 2022 is expected to follow two scenarios, says Luc.

In the event that Vietnam has effectively deployed pandemic prevention measures and the US$15 billion economic recovery program in 2022 & 2023, the national economy is likely to grow by between 6.5% and 7%.

In the event that the Covid-19 response remains inconsistent and the socio-economic recovery program slows going, GDP growth is likely to rise between 5% and 5.5%.

In order to achieve the set goal of recording economic growth at between 6% - 6.5%, Luc underlines the importance of the Government’s determination to implement the "multi-objectives" by combating the pandemic, reviving the national economy, ensuring health care capacity, and withstanding external shocks. This is along with taking full advantage of opportunities to overcome challenges both during and after the pandemic.

The economic expert also emphasizes the need to fine-tune the legal system and substantially improve the investment climate to remove barriers faced by businesses as soon as possible.

He stresses the necessity of supporting businesses in digital transformation and creating conditions in which a number of large enterprises can take the lead in connecting value chains.

FTAs - momentum for Vietnam’s economy

An automobile production line at a Toyota Motor Vietnam factory in the northern province of Vinh Phuc. Photo: VNA

Bilateral and multilateral free trade agreements (FTAs), including the Regional Comprehensive Economic Partnership (RCEP) which took effect from January 1, are expected to become a new momentum promoting Vietnam's economic growth in 2022, VietnamPlus said.

Experts, however, said that enterprises need to proactively improve their competitiveness and self-innovate in order to meet the process of international economic integration and fully tap opportunities in the new context, thus enabling them to go faster and further in the future.

Looking back at 2021, Vietnamese brands continued to gain a foothold on the world commodity map, enjoying a trade surplus of $4 billion, despite difficulties caused by the pandemic.

One of the catalysts for this spectacular achievement was FTAs, especially new generation ones.

Accordingly, the FTAs that Vietnam has signed with its partners have been opening the door for the Southeast Asian nation to integrate further into the global value chain and production network.

The new-generation FTAs, such as the CPTPP, the EU-Vietnam FTA (EVFTA) and the UK-Vietnam FTA (UKVFTA), are being implemented comprehensively and effectively.

The Ministry of Industry and Trade (MoIT) said the EVFTA, which came into effect on August 1, 2020, has created a huge boost for Vietnam’s exports, helping the country’s export turnover to the EU hit about $40.07 billion, up 14%.

As many as 201,846 EUR.1 certificates of origin (C/O) were issued in 2021 for Vietnamese exports worth $7.8 billion to 27 EU member countries, the ministry added.

Notably, enterprises exporting goods to the EU also perform self-certification of origin for 5,217 shipments valued at more than $16.5 million enjoying preferential tariffs under the EVFTA. This shows that many Vietnamese businesses have paid attention to taking advantage of opportunities from the EU's tariff reduction under the deal.

Besides, the UKVFTA, which was implemented from the beginning of 2021, also helped the two-way trade between Vietnam and the UK reach nearly $6.6 billion. The import and export values both increased by double digits to 24.1% and 15.4%, respectively.

Regarding the CPTPP, Vietnam’s exports to Canada and Mexico where Vietnam has just had FTAs with, respectively expanded by 19.5% and 46.1%.

However, in order to increase competitiveness in the markets that Vietnam signed FTAs with, a representative of the MoIT’s Import-Export Department said that businesses need to pay special heed to quality, food safety and hygiene, technical barriers, rules of origin and brand development.

In 2022, the MoIT will focus on effectively implementing the FTAs that Vietnam has joined, especially a plan for implementing new-generation ones, towards a more balanced import-export, ensuring stable markets for Vietnam’s exports./.

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