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GDP forecast: Vietnam’s GDP growth to reach 6.8% in 2022

GDP forecast: Vietnam’s GDP growth to reach 6.8% in 2022

Monday 20, 12 2021
Tim Evans, General Director of HSBC Vietnam, forecasts that Vietnam's GDP growth in 2022 will regain the rate of 6.8%, mainly thanks to a strong increase in FDI investment in the manufacturing sector.

Economic situation is gradually stabilizing

According to Mr. Tim Evans, 2021 is a very special year for Vietnam. The economy got off to a good start in the first quarter of 2021 when it grew positively thanks to a strong recovery in exports, especially technology-related commodities.

However, the appearance of the Delta variant has seriously affected the economy. The GDP index of the third quarter recorded a record low, the sharpest decrease since Vietnam started publishing quarterly GDP data.

HSBC said that after a few months of experiencing difficulties due to strict distancing measures, the economic situation is becoming more and more stable. Business activity has been bustling again in the past few months and consumer confidence is gradually returning despite many obstacles as workers have not returned to factories. Vietnam's supply chain has been impacted by widespread labor shortages, especially in labor-intensive sectors.

HSBC

In particular, the PMI, which reflects the confidence level of manufacturers, rose to 52.2 in November. This shows that business conditions have improved for the second consecutive month after a period of decline due to the fourth outbreak starting in April.

"Vietnam's economy can regain GDP growth rate at 6.8% in 2022 mainly thanks to strong FDI investment in the manufacturing sector, thereby promoting exports, especially in the context that the free trade agreements Vietnam has signed in the past two years are starting to “bear fruit." emphasized Mr. Tim Evans.

Potential for green finance

positive developments Regarding the green financial market in Vietnam, HSBC assesses that 2021 has witnessed with many large transactions. However, this market is still in its nascent stage, with much potential for development.

ASEAN

Because Vietnam is the country that receives the largest amount of FDI to GPD in ASEAN, and global corporations are increasingly paying attention to environmental, social and governance (ESG) standards, it requires a sustainable resource which is better in both quality and quantity in the countries in which they operate.

Specifically, Vietnam receives the highest value of investment in renewable energy in the ASEAN region and has the most potential for renewable energy development with growth driven by foreign investment.

In order to support the development of green finance, the State Bank of Vietnam (SBV) has recently developed a draft circular guiding the implementation of environmental risk management in credit granting activities of credit institutions and foreign bank branches, effective January 1, 2022.

The State Bank of Vietnam aims to maintain at least 10-12 banks to have a unit/department in charge of environmental and social risk management and 60% of banks to have access to green capital and deploy to loans for green credit projects by 2025. At the same time, the SBV encourages credit institutions to develop independent green financial strategies or integrate them into their annual development plans.

However, to encourage commercial banks to promote green finance, Mr. Tim Evans suggested that the SBV should consider many other solutions such as issuing specific requirements for each credit instrument for the bank to develop a better framework for green finance. The SBV should also set clear targets for green financial results for each bank, such as the ratio of unfinished green balances to total books.

In terms of banking digitization, 2021 is an important milestone for the banking industry. In 2021, McKinsey conducted a personal financial services survey on digital banking usage behavior of about 20,000 urban banking customers in 15 Asia-Pacific markets, including Vietnam.

digital banking

The results show that the percentage of Vietnamese customers using digital banking tools at least once a month has doubled between 2017 and 2021, from 41% to 82%. Fintech and e-wallet usage in Vietnam has increase from 16% in 2017 to 56% in 2021.

In addition, according to Ernst & Young, 42% of Vietnamese banks are ready for digital transformation, and 28% have implemented a digital strategy in their business operations.

Source: theleader

Compiled by VietnamCredit

Categories
Vietnam Economy

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