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Low growth, high budget revenue and signals for 2022

The data announced by the General Statistics Office in late 2021 described Vietnam’s economic picture in a turbulent year surrounded by the pandemic, the fear of disruption of supply chains, and the confidence of the business community.

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The country’s GDP grew only 2.58% this year, compared to 2.91% in 2020, the lowest since Doi Moi (renovation). This has shown how much the economy was affected by the pandemic and strict social distancing.

This was followed by a sharp decrease in purchasing power, a decline in incomes of millions of people, and hundreds of thousands of businesses leaving the market. Inflation in 2021 increased only 1.84% year on year, the lowest since 2016, which partly reflected the decline of consumer demand, especially because many items skyrocketed in price.

However, the economy still had bright spots in terms of budget revenue, import and export - key areas of the economy.

As a locality heavily affected by the Covid-19 epidemic, in 2021, HCM City’s tax revenue was 103% of the estimate, equal to 2020. “This result shows the continuous efforts of the business community in the city to overcome difficulties," said an official of the city’s Tax Department.

The general revenue of the whole country in 2021 to the tax and customs agencies exceeded 1.6 quadrillion.

Nguyen Van Can, Director of the General Department of Customs, said that import and export turnover in 2021 is estimated at 669 billion USD, of which the trade balance is expected to have a surplus of 3.5 billion USD.

Things to keep in mind for 2022

Nguyen Viet Phong, Director of the Department of Trade and Services Statistics (General Statistics Office), said that Vietnam's production and export capacity still has room for development in 2022. The new anti-pandemic methods also contributed to good growth in exports in 2022.

Pandemic forecasts are still a concern in the coming time, but Phong said that Vietnam has transformed to be safe for production. The service industry will recover strongly in 2022. From 2022, international flights will reopen, and the number of international visitors to Vietnam and Vietnamese going abroad will stimulate the recovery of the tourism industry, spreading to other industries such as accommodation and food, hotels and restaurants, wholesale and retail. Vietnam is also expanding road and rail transport, so the transportation industry is expected to develop well in 2022.

"Currently, the vaccination rate in Vietnam is very high compared to the rest of the world. There will be drugs to treat Covid-19 in 2022, so the economy will recover after the pandemic," Phong said.

But in 2022, inflation will be a problem. This has also been noted by the Department of Price Statistics (General Statistics Office). “Inflation pressure in 2022 will depend on the resilience of the world economy as well as the Vietnamese economy. When the pandemic is under control and the economy recovers strongly, inflationary pressure will come from both the supply and demand side," said a representative of the Department of Price Statistics.

According to the department, Vietnam’s economy has high openness, extensive integration with the world economy, and raw materials that ate mostly imported, so increased price of raw materials on the world market affects production costs and product prices. This will push up prices of consumer goods. In addition, the pandemic has created a break in the production and circulation chain, so businesses incur more costs, leading to higher operating costs. When the economy recovers, businesses cannot recover immediately, so there is a shortage of supply in the economy, pushing up commodity prices.

The official of the Price Statistics Department said that because of the shortage of labor, businesses have to pay more to hire workers, resulting in the increase of production costs. This is also a factor that will put inflationary pressure on the economy in 2022.

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