Vietnam's GDP growth in 2022 faces multiple challenges: VEPR report

26 May '22

2 min read

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Risks from the Russia-Ukraine conflict and the possible appearance of new coronavirus variants, inflation pressure, low productivity and sluggishness in launching economic stimulus packages are the major challenges for Vietnam’s gross domestic product (GDP) growth this year, according to a report by the Vietnam Institute for Economic and Policy Research (VEPR).

Inflation is due to sharp rise in production costs. China, a key trade partner, continues to apply ‘zero COVID’ policy with very strict pandemic control measures.

The disbursement of the public investment package will be made no sooner than mid-2022 because of problems related to investment procedures, project licensing and resources arrangement.

The policies on supporting labourers, which are under implementation, have seen some problems arising, related to procedures. The 2 per cent interest rate subsidy programme still has not run, because agencies are still busy building a legal framework for it, and it is unclear when it would be launched.

The support package was launched at the beginning of the year, but so far, many components have not yet been implemented, says the Vietnam Economic Annual Report 2022 ‘Improving the digital platform for the service sector’ by the institute.

It predicts the global economy to grow by 3.6 per cent in 2022, lower than the 6.108 per cent in 2021.

The global geopolitical environment this year shows more uncertainties, causing new difficulties for the world’s economy, it says.

VEPR feels digital transformation has been accelerated in Vietnam, which is a positive point. The pandemic has helped speed up the process in all fields, from e-commerce to finance and banking, logistics and healthcare.

Digital transformation is not a temporary solution in the current difficult period, but will be a part of the business plan of enterprises in the new normal.

VEPR foresees three scenarios for Vietnam’s GDP growth in 2022. With the basic scenario, Vietnam will witness a growth rate of 5.7 per cent. Meanwhile, a 6.2 per cent growth rate has been projected for an optimistic scenario and 5.2 per cent for a pessimistic scenario.

It would be difficult for the government to both curb inflation and obtain high GDP growth rates, according to Vu Tien Loc, member of the National Assembly’s economics committee.

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