Vietnam GDP to grow at 6.5 pct in 2022: HSBC

"Unlike 2020, Vietnam is now in a better vaccine position, which should allow for a more nuanced calibration between health protection and economic revival," the bank said in a note.

The economy saw a stronger-than-expected fourth quarter growth rate of 5.2 percent thanks to manufacturing recovering quickly and exports climbing to record highs.

Services have also rebounded though the recovery remains uneven.

Tourism-related sectors remain in the doldrums.

Though Vietnam ended the year with 2.6 percent growth, its lowest in three decades, HSBC expects it to return to a "solid growth track" this year.

But Covid-19 remains a challenge, especially with the Omicron variant spreading globally.

Vietnam’s daily caseload has been rising from 4,000 in November to over 17,000 in the last seven days.

"The success of the country in weathering through the pandemic will determine recovery pace of local demand and international travel," HSBC said.

Another concern is inflation.

As economic activity normalizes this year, HSBC expects price pressure to kick in though the trajectory should be "manageable," with headline inflation at 2.7 percent this year, below the central bank’s ceiling of 4 percent.

The bank called for more direct cash transfers to vulnerable households to mitigate the high unemployment rate and falling wages, which have resulted in "lukewarm" consumption.