return icon

Economic prospects for the world and Vietnam

The severity and persistence of inflation worldwide have surprised most central banks and organizations that offer economic forecasts. 


The global economy in 2021 saw demand recover swiftly and outpace supply, which was drastically hampered by supply chain disruptions.

Supply disruptions caused the global economy to grow less rapidly in the third quarter of 2021 than most organizations predicted. Major economies that were adversely affected by the supply crunch were the United States, Germany and Japan. The situation was slightly different in Vietnam.

The global economy

Many organizations still estimated economic growth in 2021 to be 5.5-5.7%, the sharpest since 1973, a year marked by growth stagnation and high inflation.

In 2022, most organizations forecast a growth rate of 4.1-4.6%. The slower growth is ascribed not only to a return to normalcy, but also to the dramatic drop in China’s performance. The Chinese Government seems to respond more slowly than expected. While it may unveil measures to boost the economy, its growth is expected to be less than 5% in 2022.

Inflation is predicted to ease in 2022. Prices have soared since March 2021 as stimulus packages by various economies, especially the U.S., have pushed up demand. In 2022, demand for services will rise, ballooning investment will expand supply and stimulus packages will shrink.

Central banks will be faced with the risk of inflation spreading. The public in many countries has felt the burden of higher prices, especially in the face of the energy price shock. Inflation expectation is therefore on the rise.

The U.S. will recover significantly, with GDP surpassing pre-pandemic levels and the gap between actual and potential growth turning positive in 2022. The same can be said of many economies in the West. The Federal Reserve (Fed) is expected to raise interest rate for the first time in the third quarter of 2022 after the Bank of England may do so even earlier, possibly in the first quarter of 2022.

The new Covid variant may impede supply chains and push up prices, posing a challenge to central banks if they do not quickly normalize their policies (tightening monetary policies).

Central banks’ responses will be highly differentiated. While the European Central Bank is expected to continue postponing an interest rate hike until 2023, China may slash interest rates in 2022.

The U.S. dollar is predicted to become stronger in 2022 by virtue of the economic recovery taking place in the U.S. and Fed’s interest rate hike. Together with China’s slower growth, this will be a challenge for emerging economies as they also tighten their monetary policies.

Differences in Vietnam

Vietnam differs in some aspects. To begin with, after much debate, the State Bank of Vietnam (SBV) and the Ministry of Finance have not eased monetary policies or launched significant stimulus packages. As the pandemic swept through many localities and triggered deaths and lockdowns, demand could not rise as swiftly as that in many countries. Consequently, contrary to many people’s concerns, inflation did not surge in Vietnam.

In 2021, Vietnam was expected to grow by about 3% or far less rapidly than many predicted. In 2022, as the economy returns to normalcy, GDP growth may be higher than in 2021 (although it may not surpass the global average) and increase inflationary pressure since (complete) economic reopening will gradually increase aggregate demand and stoke growth while local supply chains will be affected by disruptions in global supply chains.

A stronger U.S. dollar and inflationary pressure will force the SBV to tighten monetary supply. However, the contraction may not be significant as the central bank will want to avoid an economic collapse in a period of fragile recovery. The dong interest rate may rise slightly; at least, interest rates are unlikely to fall.


Source: SGT

Bright outlook set for Vietnam's stock market in 2022

Bright outlook set for Vietnam's stock market in 2022

Vietnam’s stock market will experience ups and downs, but the overall trend is still estimated to be up next year thanks to expectations of economic recovery after the pandemic.  


Garden on mountaintop brings VND5 billion a year to Pa Cop village farmer

Farmer Do Quy Hanh in Pa Cop village, a Thai ethnic minority man in Pa Cop hamlet in Son La province, has his own secrets to growing bountiful orange and longan orchards, bringing profit of VND5 billion a year.

Young people invent anti-cheating software for online exams

As the fourth wave of the COVID-19 pandemic hit the country in 2021, students had to study and take exams online. However, cheating on online exams has caused headaches for schools.

Fed rate hike's impact on Vietnamese economy not significant

The latest interest rate hike by the US Federal Reversal (Fed) will weigh on the global economy, including Vietnam, but experts expect impacts of the Fed’s move on the country will not be significant.

Vietnam Blockchain Union officially debuts

The Vietnam Blockchain Union (VBN) debuted on May 17 with the aim of connecting the local blockchain community to state management agencies to develop legal frameworks for the technology and to accelerate the development of VN's digital economy.

Vietnamese students champion int’l environmental competition

A team of three Vietnamese high school students has won an international prize on environmental sustainability.

NA Chairman meets with Lao PM, discussing measures to boost ties

National Assembly Chairman Vuong Dinh Hue met with Lao Prime Minister Phankham Viphavanh in Vientiane on May 17, where the two leaders discussed measures to promote bilateral relations.

Vietnamese e-commerce likely to reach US$39 billion by 2025

Vietnam’s e-commerce market has recorded strong growth over the years and is likely to bring in US$39 billion in value by 2025, according to data released by the German market research firm Statista.

The results of press privatization

The number of news articles and other articles published in electronic newspapers and magazines have soared recently.

Prime Minister meets representatives of investment funds, groups in New York

PM Pham Minh Chinh have met with leaders of global investment firm Kohlberg Kravis Roberts (KKR) and Visa Group in New York and held phone talks with the Deputy Managing Director of the International Monetary Fund (IMF) during his trip to the US.

SEA Games 31: Vietnam bags 88 gold medals as of May 16

Vietnam has so far obtained 197 medals, including 88 golds, at the ongoing SEA Games 31, topping the tally and leaving other competitors far behind.

Vietnam to play more active role at UN: PM

Vietnam will continue bringing into play its role and making more active and constructive contributions to the common work of the UN in all the three pillars – security-politics, development and human rights, PM Pham Minh Chinh has affirmed.

Billionaire list: Tran Dinh Long loses position, new names emerge

The HPG shares of Hoa Phat Group have seen a fall in price to VND35,900 per share, while billionaire Tran Dinh Long fell from the second position on the list of Vietnamese stock billionaires.

Building a national brand for Vietnamese rice

At wet markets, consumers can find varieties of rice stored in bowls and baskets from age-old brands such as Nang Thom Cho Dao, Huong Lai, Tai Nguyen and Bong Su.

National Development Master Plan: confusion due to conflicting legal provisions

The Law on Planning was approved by the National Assembly in 2017 and took effect on January 1, 2019, but after more than three years, the planning work has not been completed. Many problems have arisen and need the National Assembly’s comments.

First Vietnamese woman reaches summit of Mount Everest

Nguyen Thi Thanh Nha, also known as Céline Nha Nguyen, has become the first Vietnamese woman to conquer the summit of Mount Everest.