ADB Country Director for Vietnam Andrew Jeffries commented that Vietnam’s economy recovered faster than expected in the first half of 2022 and continues to grow amid the challenging global environment.
The steady recovery was supported by strong economic fundamentals and driven by a faster-than-expected bounce back of manufacturing and services, he held.
The Asian Development Outlook (ADO) Update 2022 says Vietnam’s economy is performing reasonably well amid uncertainties in the global economy. Restored global food supply chains will boost agriculture production this year, but high input costs will still constrain the recovery of the agriculture sector, it said.
Softening global demand has slowed manufacturing. The manufacturing purchasing managers’ index in August softened to 52.7 from 54.0 in June. However, the outlook for the manufacturing sector remains bullish given strong foreign direct investments in the sector.
Fully normalised domestic mobility and the lifting of Covid-19 travel restrictions for foreign visitors will support a robust rebound in tourism in the second half of the year, driving the growth of the services sector, the report said.
Increasing inflation in the US and the European Union has heightened inflationary pressure in the country. However, Vietnam’s prudent monetary policy and effective price controls, especially for gasoline, should keep inflation in check at 3.8 percent in 2022 and 4.0 percent in 2023, unchanged from the projection made in April’s Asian Development Outlook.
The country’s economic outlook continues to face heightened risks. The global economic slowdown could weigh on Vietnam’s exports. Labor shortage is expected to weigh on the fast recovery of the services and labor-intensive export sectors in 2022.
The slow delivery of planned public investment and social spending, especially the implementation of the government’s Economic Recovery and Development Program, can slow growth this year and the next, the report said.