Strong Economic Fundamentals—Key to Fast Recovery in Vietnam, Says ADB

The Asian Development Bank (ADB) has maintained its favorable economic outlook for Viet Nam as it forecasts gross domestic product to expand 6.5% in 2022 and 6.7% in 2023, based on the update of its flagship economic report released today.

“Viet Nam’s economy recovered faster than expected in the first half of 2022and continues to grow amid the challengingglobal environment,”said ADB Country Director for Viet Nam Andrew Jeffries.“The steady recovery wassupported by strong economic fundamentals and drivenby a faster-than-expected bounce back of manufacturing and services.”

The Asian Development Outlook (ADO) Update 2022 says Viet Nam’s economy is performing reasonably well amid uncertainties in the global economy.Restored global food supply chains will boost agriculture production this year, but high input costs will still constrain the recovery of the agriculture sector.

Softening global demand has slowed manufacturing.The manufacturing purchasing managers’index in August softened to 52.7 from 54.0 in June. However, the outlook for the manufacturing sectorremains bullish given strong foreign direct investments in the sector.

Fully normalized domestic mobility and the lifting of COVID-19 travel restrictions for foreign visitors will support a robust rebound in tourism in the second half of the year, driving the growth of the services sector.

Increasing inflation in the United States andthe European Union has heightenedinflationary pressure inthe country. However, Viet Nam’s prudent monetary policy and effective price controls, especially for gasoline, should keep inflation in check at 3.8% in 2022 and 4.0% in 2023, unchanged from the projection made in April’s Asian Development Outlook.

The country’s economic outlook continues to face heightened risks. The global economic slowdown could weigh on Viet Nam’s exports.Labor shortage is expected to weigh on the fast recovery of the services and labor-intensive export sectors in 2022.

The slow delivery ofplanned public investment and social spending, especially the implementation of the government’s Economic Recovery and Development Program, could slow growth this year and the next, the report says.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.