Country Director of the Asian Development Bank (ADB) in Vietnam Andrew Jeffries speaks at the forum. (Photo: VnEconomy) “A strong performance across sectors boostedVietnam’s economy and it expanded by 8.8% in the first three quarters of 2022,”he said at the Vietnam Economic Forum in Hanoi on December 17.
He noted that Vietnam’s export boom continued onrevived global demand and rising global community prices, adding exports grewby 13% year-on-year and imports grew expanded by 10% year-on-year, resulting ina trade surplus of 10.6 billion USD in the first 11 months of 2022.
Disbursements of foreign direct investmentincreased by 7.8% year-on-year, estimated at 7.7 billion USD, the highestdisbursement in five years. Domestic consumption in November was up 2.6% fromthe previous month and up 17.5% over the same period last year, according tothe official.
Normalised mobility boosted domestic tourism,reaching nearly 100 million domestic visitors in the first 11 months, higherthan the pre-COVID-19 period, he said, highlighting a return of internationaltourists this year.
“With these positive development, our growthforecast for 2022 for Vietnam is adjusted up to 7.5%,” he emphasised.
However, Jeffries noted, headwinds arestrengthening in the last quarter, explaining that key economic indicators haveshown weakening global demand for Vietnam’s exports and manufacturingpurchasing managers index dipped to 47.4 in November from 50.6 in the previousmonth.
Employment was also down due to declined economicactivities, he said, pointing out that recent monetary tightening,irregularities in the corporate bond market and slow disbursement of publicinvestment tightened liquidity for economic recovery.
According to Jeffries, the ADB has adjusted downits forecast for Vietnam in 2023 from 6.7% to 6.3% due to some external factorsas high inflation in the US and other advanced economies, though slightlyabating in November 2022, could prolong the current monetary tightening cycle.Even worse, the appreciating US dollar as the result of the FED monetarytightening could continue to put depreciating pressure on the Vietnamesecurrency, creating inflationary pressure, and putting pressure on the foreignreserves. Growth deceleration in China also impactsVietnam’s economic prospects in 2023, and the worsening situation in Russia andUkraine could renew surges in commodity prices, further stoking globalinflation and inducing further monetary tightening.
Regarding policy recommendations, the ADB CountryDirector said the policy responses for Vietnam need to strike a dedicatedbalance among curbing inflation and maintaining economic growth, and alsoensuring the stability of the financial sector.
For monetary policy, he suggested that maintainingprice stability should be the primary focus, and Vietnam’s monetary stanceshould continue to be vigilant of inflation in 2023, saying further policy ratehikes may still be warranted in 2023 if inflation picks up.
There should be greater and more efficientcoordination between the fiscal and monetary policies, he said, explaining thatwhile monetary measures have tightened to stem imported inflation, targetedfiscal support becomes desirable to support firms and strengthen socialprotection, given increasing impacts on the labour force due to the globaleconomic downturn.
Public investment included in the latest stimuluspackage of early 2022 should be implemented as planned, and efforts are neededto accelerate its disbursement, Jeffries said.
Speaking of the financial sector’s stability, hestressed that to minimise risks to the stability, it is critical that thegovernment continues to move forward with reforms such as promoting publiccredit ratings, developing corporate bond funds and pensions funds, andtightening the requirements to be qualified as a professional investor.
“We believe that with sound economic fundamentalsand strong leadership, Vietnam will be able to brace the headwinds in 2023,” hesaid. “Vietnam’s economic prospects for the medium and long-term remain verypositive, and we note that continued strong interest in Vietnam as an FDIdestination is a long-term vote of confidence.”
Jeffries pledged that the ADB, as a developmentpartner, stands ready to support Vietnam as required./.
VNA
