ADB keeps Vietnam GDP growth forecast unchanged at 6.5%

By Dat Nguyen   September 20, 2022 | 09:44 pm PT
ADB keeps Vietnam GDP growth forecast unchanged at 6.5%
A container ship docks at Cat Lai Terminal in Ho Chi Minh City. Photo by VnExpress/Thanh Nguyen
The Asian Development Bank maintains its 6.5% growth forecast for Vietnam this year despite an expected slowdown in Asia due to global geopolitical tensions.

"Vietnam’s economic rebound is expected to continue over the second half of 2022, supported by strong economic fundamentals, flexible monetary policy and a faster- than-expected recovery in manufacturing, services and domestic consumption from July to December," it said in a report released Wednesday.

It lowered the forecast for industry growth to 8.5% from 9.5%, but said the outlook remains bullish given strong foreign direct investment in the sector.

The determined effort by the government to disburse public investment, including implementation of the Economic Recovery Development Program, would offset the effect of lower exports caused by weaker global demand, it said.

It revised services growth to 6.6% from the earlier 5.5% forecast, supported by an expected rebound in tourism in the second half of the year.

Vietnam’s prudent monetary policy and effective price controls of gasoline, electricity, food, healthcare, and education should keep inflation in check at 3.8% in 2022 and 4.0% in 2023, the bank said.

It maintains its at 6.7% growth forecast for next year.

But it also warned of elevated risks, saying the global economic slowdown could weigh more heavily on exports than forecast.

"Although aggressive interest hikes by the central banks of major economies have helped dampen global price pressures, an intensification of global geopolitical uncertainties could push up commodity prices, worsening inflation in Vietnam."

A labor shortage would preclude a quick recovery in services and labor-intensive exports in 2022, it said.

ADB trimmed its growth forecast for Asia and the Pacific to 4.3% from 5.2% in April amid mounting challenges that include increased monetary tightening by central banks, the fallout of the Russia-Ukraine tension and recurrent Covid-19 lockdowns in China.

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