Country Director of the Asian Development Bank (ADB) in Vietnam Andrew Jeffries speaks at the forum. (Photo: VnEconomy)
“A strong performance across sectors boosted Vietnam’s economy and it expanded by 8.8% in the first three quarters of 2022,” he said at the Vietnam Economic Forum in Hanoi on December 17.
He noted that Vietnam’s export boom continued on revived global demand and rising global community prices, adding exports grew by 13% year-on-year and imports grew expanded by 10% year-on-year, resulting in a trade surplus of 10.6 billion USD in the first 11 months of 2022.
Disbursements of foreign direct investment increased by 7.8% year-on-year, estimated at 7.7 billion USD, the highest disbursement in five years. Domestic consumption in November was up 2.6% from the previous month and up 17.5% over the same period last year, according to the official.
Normalised mobility boosted domestic tourism, reaching nearly 100 million domestic visitors in the first 11 months, higher than the pre-COVID-19 period, he said, highlighting a return of international tourists this year.
“With these positive development, our growth forecast for 2022 for Vietnam is adjusted up to 7.5%,” he emphasised.
However, Jeffries noted, headwinds are strengthening in the last quarter, explaining that key economic indicators have shown weakening global demand for Vietnam’s exports and manufacturing purchasing managers index dipped to 47.4 in November from 50.6 in the previous month.
Employment was also down due to declined economic activities, he said, pointing out that recent monetary tightening, irregularities in the corporate bond market and slow disbursement of public investment tightened liquidity for economic recovery.
According to Jeffries, the ADB has adjusted down its forecast for Vietnam in 2023 from 6.7% to 6.3% due to some external factors as high inflation in the US and other advanced economies, though slightly abating in November 2022, could prolong the current monetary tightening cycle. Even worse, the appreciating US dollar as the result of the FED monetary tightening could continue to put depreciating pressure on the Vietnamese currency, creating inflationary pressure, and putting pressure on the foreign reserves. Growth deceleration in China also impacts Vietnam’s economic prospects in 2023, and the worsening situation in Russia and Ukraine could renew surges in commodity prices, further stoking global inflation and inducing further monetary tightening.
Regarding policy recommendations, the ADB Country Director said the policy responses for Vietnam need to strike a dedicated balance among curbing inflation and maintaining economic growth, and also ensuring the stability of the financial sector.
For monetary policy, he suggested that maintaining price stability should be the primary focus, and Vietnam’s monetary stance should continue to be vigilant of inflation in 2023, saying further policy rate hikes may still be warranted in 2023 if inflation picks up.
There should be greater and more efficient coordination between the fiscal and monetary policies, he said, explaining that while monetary measures have tightened to stem imported inflation, targeted fiscal support becomes desirable to support firms and strengthen social protection, given increasing impacts on the labour force due to the global economic downturn.
Public investment included in the latest stimulus package of early 2022 should be implemented as planned, and efforts are needed to accelerate its disbursement, Jeffries said.
Speaking of the financial sector’s stability, he stressed that to minimise risks to the stability, it is critical that the government continues to move forward with reforms such as promoting public credit ratings, developing corporate bond funds and pensions funds, and tightening the requirements to be qualified as a professional investor.
“We believe that with sound economic fundamentals and strong leadership, Vietnam will be able to brace the headwinds in 2023,” he said. “Vietnam’s economic prospects for the medium and long-term remain very positive, and we note that continued strong interest in Vietnam as an FDI destination is a long-term vote of confidence.”
Jeffries pledged that the ADB, as a development partner, stands ready to support Vietnam as required./. VNA