World Bank lowers Vietnam’s economic growth forecast

On the morning of April 5, the World Bank (WB) organized an online newspaper to launch the East Asia and Pacific Economic Situation Update Report for the April 2022 period with the topic “Fighting the storm”.

The report analyzes the economic landscape to date and presents the outlook for 2022 for the entire region and for each country.

Aaditya Mattoo, chief economist in charge of East Asia and the Pacific at the World Bank, said that Vietnam is one of the economies in which the World Bank has had to sharply reduce its forecast indicators for economic growth.

Mr. Aaditya Mattoo said that although in October 2021, the WB forecast that Vietnam would grow by 6.5% in 2022, but so far, the WB forecasts it to only 5.3%. However, that is only the basic scenario, worse than the forecast scenario it may be only 4.4%.

The reason why the World Bank has sharply reduced its growth forecast for Vietnam in the past time is because of the difficulties that Vietnam has faced when dealing with the Omicron strain, leading to a very high number of new infections. In addition, Vietnam is also greatly affected by the import of oil with a value of up to 3% of GDP.

The import of other raw materials such as iron, steel, etc. is greatly affected when the import price becomes more expensive; Higher costs and prices lead to Vietnam becoming one of the successful countries in participating in the global value chain.

Although Vietnam is also recognized as one of the countries with the most advantages, taking the most opportunities to expand global trade, it is precisely that makes Vietnam vulnerable to external shocks.

This means that Vietnam must be more successful in building and perfecting its social security system.

The World Bank’s chief economist recommended that Vietnam also be more cautious when considering the financial system. In fact, the financial and banking measures proposed by the State Bank must be carefully studied.

The measures and policies of Vietnam so far have helped Vietnam to go further and higher in the global value chain. But Vietnam’s participation in the global value chain at this time must be higher.

Commenting on concerns about current global uncertainties affecting FDI inflows to Vietnam and solutions to attracting international investment to achieve socio-economic development goals from 6 to 6. 6.5% this year, Mr. Aaditya Mattoo said, Vietnam is a model of a country that is very successful in attracting foreign direct investment.

Vietnam has maintained attracting FDI for many years and has been very successful in improving its position in the global value chain.

This helps the economy achieve good growth targets and reduce the poverty rate to a low level compared to previous years. Therefore, Vietnam needs to focus on finding measures that can develop service industries in depth; creating a good impetus for increasing the productivity of the service sector as well as the production and business sector and many other sectors of the economy.

Previously, HSBC had lowered its forecast for Vietnam’s growth this year from 6.5% to 6.2% due to the risk of impacts from the global fuel shortage. Specifically: A series of challenges emerged in the context of rising world fuel prices. This causes fuel costs to increase, adversely affecting the trade balance. In March 2022 alone, crude oil imports doubled while gasoline imports quadrupled the monthly average over the same period last year.

However, the report of HSBC still said that, with the new GDP forecast, it is likely that Vietnam will still be one of the countries with outstanding growth in the region this year. According to the Government’s target, GDP 2022 is in the range of 6-6.5%.

With the growth results in the first 3 months of the year, Vietnam has had a good start to 2022 with GDP in the first quarter of 2022 growing steadily at over 5% over the same period in 2021 thanks to a broad-based recovery; External growth drivers have accelerated again.

@ Cafef