Vietnam to post highest GDP growth in Southeast Asia this year

By Vien Thong   September 30, 2022 | 11:00 pm PT
Vietnam to post highest GDP growth in Southeast Asia this year
Aerial view of Hanoi. Photo by VnExpress/Giang Huy
After reaching its highest nine-month growth in the past 12 years, Vietnam is poised to become Southeast Asia’s fastest growing economy this year.

Le Trung Hieu, deputy general director of the General Statistics Office, said the agency expects Vietnam’s economy to grow by 8% in 2022 despite the not-so-positive economic status of the last quarter.

The economy grew by 8.83% in the first nine months, the highest for the period since 2011-2022, thanks to a 13.67% surge in the third quarter.

Frederic Neumann, co-head of Asian Economic Research at Hong Kong-based HSBC Holdings, said Vietnam was a bright spot amidst a gloomy global economy.

Neumann said the global economy was facing high inflation, and consumer demand in Europe was reducing as a result of high energy prices.

China's sluggish real estate sector and its zero-Covid policy was also affecting purchasing power. While this situation also impacts Vietnam, the country remains resilient, Neumann said.

Therefore, HSBC estimates Vietnam’s 2022 growth at 6.9%, the highest in Southeast Asia, while the Asian Development Bank (ADB) maintains its 6.5% growth forecast for this year.

The World Bank predicts Vietnam’s GDP could grow by 7.2% in 2022, the highest in East Asia and the Pacific region. "Vietnam will continue to be Southeast Asia’s fastest growing economy in 2023 and even beyond," Neumann said.

Speaking at an event in Ho Chi Minh City last Thursday, EuroCham chairman Alain Cany said Vietnam's prospects were still quite good.

Brook Taylor, CEO of VinaCapital Asset Management, said Vietnam’s long-term prospects were promising. "We forecast Vietnam to grow 8% this year and 6% over the next decade."

However, Vietnam would also be affected by global issues including high energy prices and input material costs.

Cany said consumer goods, textiles and electronics items were becoming increasingly expensive due to supply disruptions caused by the Russia-Ukraine crisis and China's zero-Covid restrictions.

"Vietnam may struggle to import raw materials if China maintains its widespread lockdown, because 55% of Vietnam’s imported materials and accessories come from the country," he noted.

Meanwhile, Vietnam’s exports may be hurt because of lower demand from the European, American and Chinese markets, said HSBC’s Neumann.

Vietnam’s stock market has not been faring well of late. According to Brook Taylor, CEO of VinaCapital Asset Management, the market has dropped 23% from the beginning of the year, fueling conflicting investor sentiment. Some investors are seeking profits from other emerging markets or the U.S. as the Fed raises interest rates.

To rein in runaway inflation, the Fed raised its benchmark interest rate by 0.75 percentage points on Sept 21, the third such increase, taking the Fed rate to 3%-3.25%.

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