GDP growth predicted to reach 8%

By Anh Minh   October 1, 2022 | 01:00 am PT
GDP growth predicted to reach 8%
Containers are seen at Cat Lai Terminal in Ho Chi Minh City, December 24, 2021. Photo by VnExpress/Thanh Nguyen
With the economy recovering quickly and growing steadily since the beginning of the year, the Ministry of Planning and Investment expects GDP growth to top 8% this year.

That would be significantly higher than the 6-6.5% target approved last year by the National Assembly.

The ministry said in a review report to the NA’s Economic Committee that growth in the first nine months was 8.83%, the highest rate in the last 10 years.

The services sector grew at nearly 10.57% and accounting for over half the overall growth. Industry and construction grew by over 9.44% to account for most of the remaining growth. Agriculture, forestry and aquaculture expanded by 2.99%.

The ministry forecast is however much higher than the rate predicted by some international banks: 6.5% by the Asian Development Bank, 6.9% by HSBC and 7.2% by the World Bank.

The varying projections notwithstanding, all agree that Vietnam is likely to see the fastest growth in Southeast Asia this year.

Foreign trade has boomed this year and is expected to reach US$735 billion in the full year, with exports at $368 billion, an increase of 9.5% from 2021, and imports at $367 billion.

Government revenues are forecast to exceed expectations by 14.3%, giving Vietnam more fiscal freedom to support growth and improve living standards.

The investment ministry predicts disbursed FDI to increase from $19.7 billion last year to $21-22 billion.

Of 15 social-economic goals set for 2022 by the NA, only one was not achieved: Productivity growth, which, at 5.2%, fell short by 0.3 percentage points.

But despite all these encouraging signs, the Ministry of Planning and Investment warned about the ever escalating inflationary pressure.

According to the ministry, inflation could be prolonged by the recovery in demand and buoyant public expectations, increased minimum wages and rising international interest rates.

This year the economy has encountered difficulties caused mostly by the increasing prices of fuel, raw materials and other inputs.

With its highly open economy, Vietnam is considered by experts to be vulnerable to challenging external factors like a surging U.S. dollar, reliance on imported machinery and equipment and s post-pandemic labor shortage that has not been resolved.

Considering such challenges, the ministry wanted the government to keep a close eye on global events and, depending on them, tweak growth, inflation, credit limit, and other expectations.

As for monetary policy, it wanted the State Bank of Vietnam to be both cautious and flexible, managing its foreign currency reserves effectively, increasing interest rates when necessary to stabilize the foreign currency market and the economy generally and control inflation.

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