Vietnam’s outlook has GDP growth accelerating

Vietnam, south-east Asia’s fastest-growing economy, reaffirmed its outlook for an expansion of as much as 6.5 per cent this year, as it expects activity to pick up from a slower-than-expected first quarter as risks from COVID-19 recede.

Gross domestic product will expand by between 6 per cent and 6.5 per cent this year said Le Trung Hieu, head of the GDP department at the nation’s statistics office. That would be the quickest pace in the region and the second-fastest in Asia-Pacific after India’s estimated 7.5 per cent, the Asian Development Bank said.

Mr Hieu said manufacturing would be the main driver and tourism, construction and other industries were expected to have extended recoveries.

Although data on Tuesday showed GDP in the three months to March grew at a slower-than-expected 5.03 per cent from the previous period, economic activity was gaining momentum in the remaining three quarters of the fiscal year, helped by increasing vaccination levels.

Mr Hieu said the best-case scenario was for growth to touch 6.5 per cent should the Russia-Ukraine conflict be resolved.

“Vietnam’s economy was severely disrupted last year by the pandemic, but has started to normalise,” ANZ head of Asia research Khoon Goh said.“We expect growth to pick up at a faster pace from the second quarter.”

A stronger manufacturing performance is key to sustaining overall activity in Vietnam, where exports are a main driver of the economy. The nation’s parliament in January approved a stimulus package worth about 347 trillion dong ($20.2 billion) to see the economy through COVID-19 disruptions, and return growth to 6 per cent to 6.5 per cent this year.

Still, the war in Europe remains the biggest risk to the outlook, with geopolitical tensions adding to global supply strains on everything from food to fuel.

Consumer prices rose 2.41 per cent in March from a year earlier, the statistics office said, compared with the government’s target to cap average inflation at 4 per cent this year.

By Nguyen Dieu Tu Uyen – Bloomberg – March 29, 2022