Illustrative image (Photo: VNA) Hanoi (VNA) – The World Bank (WB) has forecast that Vietnam’seconomic recovery is likely to accelerate in 2022 as GDP growth is expected torise to 5.5 percent from 2.6 percent in the year just ended.
The forecast was made in the WB's economic update for Vietnam thatwas released during a press teleconference in Hanoi on January 13.
Entitled “No time to waste: The Challenges andOpportunities of Cleaner Trade for Vietnam”, this edition argued that greeningthe trade sector should be a priority. Trade, while an important driver ofVietnam’s remarkable economic growth over the past two decades, iscarbon-intensive - accounting for one-third of the country’s total greenhousegas emissions - and polluting.
While Vietnam has started to decarboniseactivities associated with trade, more need to be done to respond to mountingpressures from main destination markets, customers, and multinational companiesfor greener products and services, it said.
“Trade will be keycomponent of Vietnam’s climate actions in the years to come,” said Carolyn Turk, World Bank Country Director for Vietnam. “Promotinggreener trade will not only help Vietnam follow through on its pledge to reachnet zero emission in 2050 but will also help it keep its competitive edge ininternational markets and ensure trade remains a critical income and jobgenerator.”
The report recommended that the Vietnamese Governmentact on three fronts: facilitate the trade of green goods and services,incentivize green foreign direct investment, and develop more resilient andcarbon-free industrial zones.
Assuming the COVID-19 pandemic will be brought under control athome and abroad, the forecast envisioned that Vietnam’s services sector willgradually recover as consumer and investor confidence restores, while themanufacturing sector benefits from steady demand from the US, the EuropeanUnion, and China. The fiscal deficit and debt are expected to remainsustainable, with the debt-to-GDP ratio projected at 58.8 percent, well belowthe statutory limit.
The outlook, however, is subject to serious downside risks,particularly the unknown course of the pandemic. Outbreaks of new variants mayprompt renewed social distancing measures, dampening economic activity.Weaker-than-expected domestic demand in Vietnam could weigh on the recovery. Inaddition, many trading partners are facing dwindling fiscal and monetary space,potentially restricting their ability to further support their economies if thecrisis persists, which in turn could slow the global recovery and weaken demandfor Vietnamese exports.
WB experts said careful policy responses could mitigate theserisks. Fiscal policy measures, including temporary reduction of VAT rates andmore spending on health and education, could support aggregate domestic demand.Support for affected businesses and citizens could be more substantial and morenarrowly targeted. Social protection programmes could be more carefullytargeted and efficiently implemented to address the severe and uneven socialconsequences of the crisis. Heightened risks in the financial sector should beclosely monitored and addressed proactively./.
